With President Biden’s announcement that he will seek reelection in 2024, a new confrontation with former President Trump, who seems to be the Republican with the best chance of being his party’s candidate, is on the horizon.
It is incredible that in a country of 336 million inhabitants, there cannot be two candidates who are honest, and conciliatory, and who can be accepted by a relevant majority of the citizens.
Biden has serious cognitive problems, forgets where he is, calls people who have already passed away, confuses dates, etc., but above all, he has the shadow of his son Hunter, a proven crook who apparently shared part of his ill-gotten gains with his father. It is incredible that 53% of the Democrats and 70% of the population did not want Biden to be the candidate again, nor Kamala Harris to be vice president.
On the other side, Donald Trump, who as president was polarizing and wrongly gave credibility to the extreme right, had the country in a very solid economic situation, making it self-sufficient and even an energy exporter, and managed to re-establish the image of a leading country in the world, perhaps not out of conviction but out of fear, but at the end of the day, as a strong and respected nation.
Trump, as a person, is unpleasant for many due to his haughtiness, arrogance, and egomania, and even many Republicans, would consider not voting, since they approve of the party and its ideas, but not of the candidate.
The electoral campaign is just beginning, and there could be many surprises along the way, including the emergence of an acceptable Democrat, especially if, in the next few months, there is not a health episode of Biden, who is already 80 years old, or a conviction of Hunter that brings out the dirty laundry of the Biden family.
On the Republican side, there could only be opposition to Trump if there are not many pre-candidates and all those who do not like the former president unite in support of another candidate.
Meanwhile, the country seems to be stable, with inflation declining, but still very high (4.2% PCE, the index favored by the central bank), unemployment very low (3.6%), and GDP growth rather weak (1.1%). The banking crisis seems to be helping the Fed slow the economy. It is expected that the recent failure of the 3 banks that the FDIC intervened, as well as the reluctance to lend by the other banks in their eagerness to minimize risk, will affect GDP growth by about 1%, a stronger impact than the Fed’s rate increases.
On the social side, we saw inexplicable things such as the election for Mayor of Chicago, where the previous mayor was “progressive”, and liberal in her pursuit of criminals, which made the city the most dangerous in the country and excessive in its spending, resulting in a huge deficit and an unsustainable financial situation. In April, the people went to the polls and elected a candidate very similar to what they had instead of a candidate, also a Democrat, but with fiscal responsibility and a promise to fight crime.
The political-social situation in Mexico remains the same, a complicated country with:
- A president with health problems who is bent on disappearing all the institutions that had begun to create a rule of law, such as the National Electoral Institute (INE) or the National Institute for Access to Information (INAI).
- A divided congress where Morena has a majority, but does not reach the 2/3 necessary to do whatever the president wants.
- An upcoming election in the State of Mexico, where the real strength of the party in power and the viability of winning with a coalition candidate will be seen.
I am not sure that a victory of Alejandra del Moral is a preamble of what may happen in 2024 since, apparently, the agreement is that the coalition candidate for the presidency will come from the PAN, and I have my doubts that the PRI members will vote for a candidate of the blue party.
AMLO’s feud against the United States is still going strong, which, to me, is a crass mistake since it does nothing more than alienate the powerful neighbor to the north.
The failure to acknowledge the fentanyl problem, blaming the Chinese and the Americans, the statements that Mexico is a safer country than the United States, and the little importance given to the horrible event of the immigrant shelter, create an antagonistic environment that does not favor Mexico.
AMLO has had several setbacks in the Supreme Court, such as the transfer of the National Guard to the military, the dramatic change to the mining law, and the original proposal against INE, which gives a glimmer of hope that democracy in Mexico still has someone who wants to defend it.
The population’s perception of insecurity reached its highest level since 2013, where 62.1% of respondents said they do not feel safe, with Los Cabos (22.7%) being the place perceived as the safest and Naucalpan (88.1%) as the most insecure.
85% of workers responded that they are worried about their finances, and only 28% felt that their children will have a better standard of living than they do today.
I would like to comment on the purchase of the 13 electricity-generating plants from Iberdrola, 12 solar and one wind, for $6 billion dollars. I honestly did not understand the purpose of this operation, since the cost was extremely high and not a single additional kilowatt was generated, when we know that one of the main obstacles for more foreign factories to establish themselves in Mexico is the lack of infrastructure with energy (and water) at the top of the list of insufficiencies.
That money, if invested in new power plants, would have alleviated the problem and would serve to create jobs and generate more economic activity instead of putting that money in the pockets of the Spaniards, who immediately announced that they would invest it in Brazil, where clean energy is a priority and where the government offered them support and guarantees.
Just when I thought that the “fat cows” that the Mexican Tax Collection Service (SAT) could squeeze with monumental lawsuits were over, now VITRO has an outstanding account of $2,622 million pesos. While I agree that the Treasury should collect what is due from taxpayers, we must also consider that tax terrorism is a limiting factor for investment, both foreign and domestic.
The rest of the world continues to be complicated, with China and Brazil establishing a much closer relationship to the detriment of the union of the American bloc. The Chinese are having a lot of trouble with their investments in third-world infrastructure under the BELT and ROAD program, which is said to have lost $220 billion on the other hand, Xi is trying to boost his image as a peace negotiator after getting Iran and Saudi Arabia to resume relations and apparently seeking some settlement in the Russia-Ukraine conflict.
China reported a 0.3% drop in inflation in March and an increase of only 0.7% in the last year, not a very credible figure, but perhaps impacted by the shutdown of its economy, which is over, and the number will go up when consumption returns to normal.
An interesting fact from Japan. In the last 43 years, its stock market index rose from 10,000 to 39,500 (395%), while in the U.S., it rose 3379% in the same period. It is evident that a country where the population is shrinking year after year will have an economy with little growth and no inflation, but at the same time, with little incentive for investment.
The IMF (International Monetary Fund) projected a global increase of 2.8% for 2023 and only 3% in the 2024-2028 period, the lowest since 1990. It attributed this slowdown to countries’ fiscal policies, the increase in central bank rates, and the U.S. banking crisis.
It is also projected that global debt will reach 100% of world GDP by 2028.
Other interesting data from the rest of the world: inflation in Argentina at 107% and government interest rate at 81%, Russia receiving 45% less revenue from oil sales due to sanctions and price limits imposed after the invasion of Ukraine, and the size of the Swiss bank UBS after the merger with Credit Suisse is double the total economy of the country.
India’s population of 1.429 billion people surpassed that of China (1.426 billion) for the first time in history.
Turning to the economic field, the United States is showing a drop in corporate profits, many of which have seen their margins shrink as they are unable to pass on the full inflationary increases to the consumer.
The number of job openings has been shrinking from 2.1 times the number of unemployed 8 months ago to 1.7 times in March.
GDP grew a rickety 1.1% annualized in the first quarter of the year, much lower than the projected 1.9%, and although inflation was down 2%, labor costs rose 1.2% in the quarter vs. 1.1% in the previous quarter.
Today 17% of cars sold in the U.S. are below $30,000, down from 44% 5 years ago. 14.7% of all cars sold are electric. The vacancy rate in office buildings is 12.9%, although only 61% of leased office space is being used because of the huge number of people working from home.
In the first quarter of 2023, banks took losses of $3.4 billion (7.3% higher than in the first quarter of 2022 on their credit card portfolios, a clear example that the economy is already slowing down and people with lower purchasing power are being hit by inflation.
Stock markets had a slightly positive month, fixed income markets were very stable with a slight increase in bond prices, and the dollar continued its downward march except against the peso and the real. Gold rose to $1,991, after touching $2,069, its all-time high. Bitcoin rose above $30,000 as it was considered immune to the banking crisis before retreating to $28,500.
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