Saturday, January 31, 2015

Today's Headlines: Remember the 'Mexican Moment'? It just got cut out of the budget, along with hope, progress and $124 billion pesos.

The Mexican Moment, a phantom to start with, is dead.  El Universal’s lead head tells why: “124 billion pesos cut; GDP seen falling 0.5%." Excelsior understates it: “Finance Secretariat applies preventive cuts.” La Jornada, in a two-deck banner, the only headline on its front page, gives the bigger picture: “Crisis revealed in public treasury.” Reforma tells the medium-term effect: “Cuts will hit growth.” And Milenio brings it home by focusing on an example of the immediate fallout: “Peña cancels two emblematic projects.”
    Milenio's talking about a modern rail line across the Yucatán peninsula and, more important, a high-speed train connecting Mexico City with the commercial city of Querétaro. Neither, now, is going to be built for many years, if at all. With them dies the illusion that prosperity waits around the corner, something the Peña Nieto administration has worked hard to conjure from its first day.
    A third of the cuts, which according to Finance Secretary Luis Videgaray result from meager oil revenue, are in current expenditures, which means jobs lost and subsidies ended. The rest are in investment, which means progress stalled. Together they mean half a percentage point shaved off whatever economic growth may occur in 2015.
    The $124 billion-peso (about $8.3 billion-dollar) spending reduction exceeded analysts’ predictions. It is generally seen as a healthy facing up to cruel circumstances. It is only the beginning. Videgaray warned that the 2016 budget won’t be assembled in the usual manner — that is to say by funding programs based on the previous year’s outlays. “Reality demands a complete revision of what we spend tax revenue on,” Videgaray said.
    In other words, zero-based budgeting, which in this context sounds like code for austerity. No matter what you call it, it won’t go over well, safe to say. A sizable chunk of the population, probably a majority by now, is enraged at what they see as the federal government’s lack of attention to the country’s social ills, favoring macroeconomic policies instead. Now it looks to a skeptical nation that it can’t even do that right.

One federal mega-project that survives the cuts is the huge international airport planned for the outskirts of Mexico City. But it will have to soldier on without the participation of two major players, according to El Universal’s No. 2 headline: “Slim, Higa drop out of new airport.”
    Among the bidders for the three dozen or so major construction contracts is expected to be a consortium headed by ICA, Mexico’s leading infrastructure company. Among the nine participating partners were Higa, owned by Juan Armando Hinajosa, and CICSA, belonging to Carlos Slim.
Hinajosa built and financed a gleaming white luxury house for President Peña Nieto’s wife as he won the bidding for the Mexico City-Querétaro rail project (the sale, the bidding and now the project have all been reversed). Slim needs no introduction.
    The coverage cites sources insisting that  the Casa Blanca scandal was not a factor in the decision to drop out of the bidding. Rather, both Higa and CICSA are upset that the Peña Nieto administration seems to be leaning toward foreign firms.

The follow-ups to Thursday’s children’s and maternity hospital tragedy are threefold. The most disturbing headline comes from Reforma: “Seven babies still in intensive care.” Milenio’s No. 2 head (all papers lead with the budget cuts) underscores the difficulties of the chaotic situation: “Nine babies still to be identified.” They’re using DNA testing. Excelsior goes with the inquiry: “Gas supply company under investigation for homicide.” We already knew that, but this time it’s President Peña Nieto, not Mexico City Mayor Miguel Ángel Mancera, making the announcement.

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