Not every country goes from “investment grade” to “junk” in no time. It requires a singular level of economic ineptitude, to be constant in bad decisions, destroying the foundations built throughout years of financial responsibility. Pride is fundamental in order to be able to invent objectives and plans without the slightest theoretical or technical foundation, and to present them without blush before the world. An inexperienced ignorant who thinks he is a genius of public policy, and he also has a lot of “initiative”.
Only someone who believes that governing is simple, that everything is a matter of will and power, can achieve it. Someone who presumes that his officials are not very capable, but honest (obvious the first, doubt the second). It is not simple, but from time to time the electorates let themselves be carried away by imaginative promises and implausible offers without head or feet.
It requires, in a few words, an economic messiah, someone who believes that wearing a presidential sash grants almost divine power. A person who, in his displays of incompetence mixed with arrogance, ends up scaring investors and leaving the markets stunned. Someone, for example, who considers himself capable of transforming a moribund oil company into an industry giant, putting a totally ignorant person to run it. In the same way that it can build a refinery in an inadequate area, in three years and for eight billion dollars. And, in addition, willing to destroy a very expensive infrastructure project, already advanced in its construction, in exchange for a proposal that no expert endorses, and that has as an important base to operate successfully the peculiar belief that airplanes repel each other.
In order to achieve the economical “junk” degree, it is imperative to show a particular contempt for private investment, for example, by no longer allowing the oil company to associate with other companies in the sector, or by simply canceling any possibility of new private investments in the energy field. At the same time, of course, claiming that a return to old statism is the best thing that can be done. Adding some fights with the private sector (gas companies) or threats via the Treasury Department (extinction of domain) also helps a lot.
The flexible credit line that Mexico has renewed with the International Monetary Fund for more than 10 years is less than two weeks away from expiration, and the silence on the part of the organization does not indicate anything positive (it would be another enormous step toward the junk level). It has been at least two months since the administration requested the renewal, and nothing. It is not surprising that the technocrats of the IMF see the actions of the Mexican government as “peculiar” (to use a friendly term).
It is a road without return, because arrogance implies blindness to disaster. It’s all a matter of putting on the best smile and saying “Vamos requetebién” (We are doing mighty good) or “the people are happy, happy, happy”. The qualifiers that will degrade Mexico (a drop from Moody’s grade on Pemex could initiate the collapse), will be accused of accomplices in corruption. In fact, they would be the scapegoats for future disasters. If before, “Yankee imperialism” was blamed, the modern thing would be to argue that the cause of the problems is called Standard & Poor’s.
Sooner or later, the Mexican government will receive that label that is being worked on with such tenacity: that for investing, Mexico is “junk”
Sergio Negrete Cardenas
El Financiero – Original article in Spanish
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