Monthly Archives: March 2013

75 years, 107 days, and Mexico’s Reform Agenda

mexicoToday marks the 75th anniversary of the nationalization of Mexico’s oil industry, exactly one week after President Enrique Peña Nieto celebrated his first 100 days in power.

Mexican Presidents are elected for a single six year term, taking office in December. In modern times, regime change has been associated with economic and political upheaval.

Felipe Calderon’s razor thin victory in 2006 gave rise lengthy street protests and an aggressive militarization of government anti-drugs efforts driven, at least in part, by the newly-elected President’s attempt to assert his authority and establish legitimacy. Continue reading

Austerity and Equality

Recent research by the OECD is unequivocal, if hardly surprising: reducing the fiscal deficit by raising taxes makes society more equal, but doing so by reducing welfare spending makes society more unequal. This holds for all 29 OECD countries studied, although the magnitude varies by country, depending on how large and progressive are their respective tax and welfare systems. Continue reading

Can’t Pay, Won’t Pay

The debate on debt may go down as the defining debate of this decade. Everyone is painfully aware that after a borrowing-fuelled consumption and property bubble, Ireland is now reeling from the hangover.

The government is over-indebted, businesses are over-indebted, and families are over-indebted. Even the banks themselves are over-indebted, mandated by the troika to shrink their balance sheets, reining in credit for everyone else as a result. As a nation, we are among the world’s leaders in the borrowing race, total private sector credit standing at over 300% of GDP, even after IFSC activities are stripped out, and general government debt nearing 120% of GDP.

This debt overhang is undoubtedly undermining investment, job-creation and economic growth. Everyone is spending less, borrowing less, investing less and busy paying down loans to ‘repair their balance sheets’. Even though Ireland’s savings rate has increased markedly in recent years to about 11%, investment as a proportion of GDP is only 10%, near record lows and about half of where it needs to be at to retain and improve the country’s production capacity. Continue reading