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Tuesday, January 31, 2017

On The Brink -- January 31, 2017

Updates

Later, 9:59 p.m. Central Time: Mexico raises the price of gasoline (see below); Argentina raises electricity tariffs by up to 148%. Financial Times. Trump is going to run circles around the rest of the world, making America greater than it's ever been.

Original Post 

To the list (Ukraine, Crimean, Baltic, Saudi Arabia, Mideast), add Mexico. In The San Diego Union Tribune today, "the reasons behind gasoline protest in Mexico." Some data points:
  • increases in gasoline prices are being accelerated in an ambitious effort to turn around the country's energy sector
  • the recent increase will be followed by another increase at the pump in February, 2017
  • half the population lives in poverty
  • Mexico has a new problem: Trump (Vicente Fox' response on US television certainly did not help the situation)
  • along with South African, Mexicans spend the largest portion of their incomes on gasoline (I assume that was before the recent increase in the price of gasoline); gasoline was already heavily subsidized; gasoline tax was the revenue that ran the country
  • like Venezuela: one of the world's top producers of crude oil, yet one-third to one-half of the country's gasoline is imported from the United States
  • Mexico's treasury has been used to subsidize gasoline -- not education, infrastructure, public services, or health care
  • regular gasoline went up 14%; will go up another 8% in February; in fact, in some areas along the border, some consumers felt the price had gone up 50%
  • gasoline tax: accounts for 50% of the price at the pump; tax was not decreased despite rise in price of gasoline
  • Mexico ranks dead last among OECD nations in collecting tax revenue (similar to problems Greece has)
  • daily minimum wage in Mexico: $3.60/day
  • Mexican congressmen voted themselves a Christmas bonus: $11,000/senator and $6,500/congressman
  • many government officials also receive $250/month in stipends for gasoline -- that's per month (how much do you spend on gasoline each month; something tells me government official are selling these vouchers on the "black market")
  • Nieto's approval numbers down to 12%
  • value of the peso is falling
  • US investment is likely to fall under Trump
  • but Nieto and Vicente Fox both say the US needs Mexico more than Mexico needs the US
Maybe. 

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