Friday, January 9, 2015

Today's headlines: Silver over lead

We get a break from violence in today’s top headlines, with all five dailies turning to economic news — plata sí, plomo no. Here’s the context:           
    Plunging oil prices are no cause for celebration in a petroleum-exporting country like Mexico, especially when its citizens started the new year paying more, not less, at the pump. With Mexican crude down to $40 dollars a barrel — less than half the $90 dollars of a year ago — nobody’s pretending that the national budget isn’t getting hammered. Even with “oil insurance” protection, the federal coffers took in 6% fewer petro-pesos over the last two months of 2014 than it did in the same period in 2013. What’s more, it’s predicted that non-petroleum tax revenue will also soon be dipping below expectations — that is, below what was assumed when the 2015 budget was put together.
    What to do? On Thursday, Finance Secretary Luis Videgaray announced what the Peña Nieto administration will not do, as summarized in Excelsior’s main headline: “Neither more debt nor more taxes.”  If a government needs money, it can either borrow it or confiscate it. The first is too risky, Videgaray is telling us; Mexico is already deep in the hole in its public debt. The second is politically impossible; Mexicans were hit with big tax hikes a year ago and the president promised there’d be no more for the rest of his term.
    Which leaves one option, as La Jornada describes it: “Videgaray anticipates cuts in public spending.” That choice seems to be going over fairly well across the political spectrum, but the reality of even limited austerity is usually crueler than the idea of it. Should the cuts be seen as increasing Mexico’s infamous inequality, you can expect some action — in the street.

If the government is looking for ways to cut costs, it should make sure its subscription to Reforma doesn’t run out. As is its habit, Reforma leads today with another instance of what it considers wasteful government spending: “Parties enjoying 5.3 billion pesos.”  The reference is to Mexico’s public financing of electoral campaigns, designed as an antidote to shady contributions but traditionally functioning as a supplement to them.
    With mid-term elections set for the first week of June, the payout to the political parties will total $380 million dollars. Don't count on cuts coming from this stash, though. According to Reforma, the PRI, the president’s party, will get a quarter of the money, even though there are nine parties contending.

El Universal goes with an update in the Ficrea scandal, in which thousands of investors lost billions of pesos when the Mexico City financial institution’s owner took off with all the money. It turns out that the owner — controlling partner, more precisely — runs plenty of other companies that are still in business. What is the Attorney General’s Office (PGR) doing about that? Nothing, according to El Universal’s lead head: “PGR still hasn’t touched Ficrea owner’s businesses.” The fugitive Rafael Olvera Amezcua’s still functioning enterprises include hotels, restaurants, a chain of optics businesses and an aerospace consulting firm.

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