The Mexican Economy
On December 20, 1994, in an attempt to make Mexican products more competitive, Mexican President, Ernesto Zedillo Ponce de Len, devalued the Mexican Peso. Unfortunately, attempts at keeping the Peso to only a fifteen percent devaluation failed. The Peso dropped almost forty percent (Roberts, 1). It went from 3.5 to almost 7.5 peso's to the dollar before it stabilized. The devaluation not only sent shockwaves through , but through the rest of the world. Why should the world now risk it's money to save Mexico? Why not just let and government collapse?
To calm these shock waves United States President Bill Clinton, acting on his executive order, organized an approximately $49.5 billion ...
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Mexican government is broke, citizens unhappy, rebels are itchy, and opposition leaders are gaining influence. All these are ingredients to a bad situation getting worse--without money or influence, the Mexican government is bound to be overrun.
Mexico over the past few years has gone from a totally corrupt and controlling government to a more democratic, privatized, and deregulated government. This has opened Mexico up to greater economical prosperity. Everything from government run factories to banks have been sold to foreign and Mexican investors, willing to pay high premiums for these assets.
With the threat of rebels in the south or the Institutional Revolutionary Party (PRI) possibly overthrowing the government, the rewards that foreign investors were about to reap from the large scale Mexican privatization
were quickly fading, hence the devaluation of the Peso in 1982. Who wants to invest in Mexican institutions if the government no longer has the power to protect ...
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hands all over the world.
The December 20th devaluation of the Peso sent the Bolsa (Mexican Stock Market) plummeting--but things didn't just stop there. Upon opening, other markets began to plummet also. Mexican stocks (i.e. Telephonos de MMexico, Grupo Televiso, Grupo Simek, etc.) traded on foreign stock exchanges began to drag the exchanges lower. Investors fearing that the peso's devaluation will not only affect Mexican stocks, but the stocks of foreign companies doing business there, began withdrawing billions of dollars out of these stocks (Lane, 16.)
Not only did the stock markets suffer, but the debt markets also began plummeting, especially in emerging ...
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The Mexican Economy. (2003, December 20). Retrieved November 18, 2024, from http://www.essayworld.com/essays/The-Mexican-Economy/171
"The Mexican Economy." Essayworld.com. Essayworld.com, 20 Dec. 2003. Web. 18 Nov. 2024. <http://www.essayworld.com/essays/The-Mexican-Economy/171>
"The Mexican Economy." Essayworld.com. December 20, 2003. Accessed November 18, 2024. http://www.essayworld.com/essays/The-Mexican-Economy/171.
"The Mexican Economy." Essayworld.com. December 20, 2003. Accessed November 18, 2024. http://www.essayworld.com/essays/The-Mexican-Economy/171.
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