Who is Enrique Peña Nieto? The Mexican Media And Why I don’t Like Either

Well, according to Wikipedia… Enrique Peña Nieto (born July 20, 1966) is a Mexican politician. A member of the Institutional Revolutionary Party (Partido Revolucionario Institucional, PRI), he served as governor of the State of Mexico from 2005 to 2011. On September 19, 2011, he announced his candidacy in the 2012 Mexican presidential election to succeed Felipe Calderón. Blah blah blah blah…. Etc.

Well, I don’t like Enrique Peña Nieto because… well… because of many things. First of all, because he might be the one that wins! And that is not what bothers me the most. What bothers me is the Mexican media has pushed to promote such a mediocre candidate. What bothers me is that the media has taking care of washing the minds of the Mexican people with an amazing 24/7 full load of crap. Telenovelas (Mexican soap operas) run 24 hrs a day with commercials announcing either a product that people don’t need or another soap opera. Ohh and if you are tired of soap operas (maybe you don’t like the one that they run at 2:30pm) you can always watch a show that talks about the people in the soap operas or a show about what the people in the soap operas were wearing while they were going to an award celebration about soap operas… anyway you get the point.

And you ask yourself… “What does this has to do with Politics and the Presidential candidacy” Well, there shouldn’t be any connections, unfortunately there are. As many people know there is a lot of corruption in Mexico, let’s not talk about Nieto and his connection with former president Carlos Salinas de Gortari or the theory that elections are won before even people vote. Many people know that the Media is in favor of Pena Nieto, using the most famous television and radio channels to promote Pena Nieto as the next President, not to forget that he is married to a soap opera actress and he resembles the looks of one too. But why is that I don’t like Peña Nieto? As I mention above, one of the reasons is his connection with former Mexican President Salinas de Gortari, one of the many former presidents that left the country in a worst situation than when they step into office. Another reason is that the big conglomerates, such as Televisa, would have total control of the President in the case that he wins. Also, I think he fails to be a future leader in a world where everything is interconnected. And finally I couldn’t say it better than the great Carlos Fuentes in a press conference, who explicitly said that Peña Nieto has the right to not read his works, but that he "does not have the right to become the President of Mexico" due to his "ignorance."In an interview with BBC News, Fuentes mentioned that Peña Nieto does not have the capacity to converse and be on the par with world leaders like Barack Obama, Angela Merkel, and Nicolas Sarkozy.

The Budget

I would like to make reference to a joke I heard on "A Prairie Home Companion" in 89.3FM this last Saturday. It goes something like this "the only good thing about this budget debate is that we finally know what government jobs are essential"

According to the WSJ "In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy." ">WSJ

One of the problems with this debate is that, according to the WSJ, "The U.S. Treasury issues debt to fund the country's obligations, including interest payments. But Congress sets the limit, or ceiling—currently at $14.294 trillion—and the country has roughly $14.2 trillion in debt outstanding. The Treasury wants the ceiling raised now, believing the country could potentially default on its debt July 8."

According to wikipedia "A high debt level may affect inflation, interest rates, and economic growth. A variety of factors are placing increasing pressure on the value of the U.S. dollar, increasing the risk of devaluation or inflation and encouraging challenges to dollar's role as the world's reserve currency."

All I have to say is that the U.S. defaulting on its debt would lead to bigger problems than those we are facing today.

So here I go again...

Hi everyone,
Well, to be honest with you I been lazy and haven't pick up the keyboard to write anything. I even thought that my blog was cancelled or erased.
I want to start writing again and so i will begin by just making reference to an article I read in the March issue of FORTUNE magazine where they interviewed David Herro from Oakmark International fund; which, according to their web page, generally invests in mid and large cap companies outside the U.S.
In this interview Scott Cendrowski asks Mr. Herro where does he think is the worst place to be right now; to which Mr. Herro replies Energy, natural resources. Mr. Herro elaborates saying that people don't see that the demand for these resources is declining in the developed world. He also makes reference to the movement towards green technology and energy efficiency.
I think it is true that the developed world is moving towards energy efficiency and green technology. However, I do not think oil is the worst place to be right now. at least in the short term with all the conflicts that exist in the middle east and the huge expected demand of natural resources from china, India, and Brazil. In the long term I would like to think that we move away from oil.

An investment opportunity in Oil

In the May 31 - June 6 2010 issue of Bloomberg Businessweek is an report saying that the world price of oil will peak between 2015 and 2020... It will reach $150 to $300 a barrel.

Another important factor to take into consideration is future government regulation that will be taking place after BP's oil spill in the Golf of Mexico. Government regulation could lead to higher prices as well as an increase in the consumption in foreign oil.

Right now the price of oil is $73.43. If you buy one barrel at this price and then it goes up to $100 you will be making a return of 36.18% in your investment [(100-73.43)/73.43]. However, there are other things to take into consideration like the increase in the technology for electric batteries for cars as well as the movement to a more green economy. Thus, it is important to keep an eye on alternative energy investments.

Problems with Regulation: The EURO

According to the WSJ "The euro plunged to a fresh four-year low Tuesday, sliding below $1.22 as reports that Germany will issue new restrictions on some types of bearish bets on stocks and bonds sparked uneasiness in financial markets. U.S. stocks fell deeper into the red and investors poured into safer-haven U.S. government debt."

I think that one of the problems with regulation is that it prevents the market from following its natural course. Market failures will continue to exist, not matter the amount of regulation established. According the WSJ "The moves came after Germany's financial regular said it is banning naked short-selling of certain euro-zone debt offerings and credit default swaps as well as some financial stocks effective at midnight local time. Under naked short selling, the shares being sold aren't borrowed in advance." In my perspective I think that short selling is a good thing; Short selling works as an indicator of the financial situation of a security or in this case a country. Thus, prohibiting the existance of short selling is prohibiting the flow of information. The problem with Greece is not whether it is being short but rather its financial and management situation. The fact that it can be short is an indicator of the situation.

Scipio Africanus: Starbucks vs. McDonalds

Scipio Africanus according to Dr. Laurie of The California State University Long Beach is a strategy where a company attacks the market of another company, and the second company in retaliation attacks the first company market. One example is the current situation with Starbucks and McDonalds. In retaliation of Starbucks intent to sell sandwiches, McDonalds launched a coffee campaign and remodeled all their stores. The coffee, many argued, was better and at a much better price. This spring McDonals launched another coffee strategy: frozen frappes. Directly attacking Starbucks frapuccino market. However, Starbucks has launched a defensive strategy: attacking McDonalds cheap coffee. Starbucks by using one companies acquired seven years ago, Seattle's Best, is planning to expand to a mass market by using the slongan "Great Coffee Everywhere."

In my opionion this is a risky strategy; Starbucks is dealing with a giant company with unlimited resources. Thus, in order for this to work, Starbucks needs to make sure to take over the market. According to Ralph Waldo Emmerson “When you strike at a king… you must kill him.”

Greece, Can a Bailout work?

Well, Greece makes $343 billion per year and owes $405 billion. Can we arguably say that a bailout will get them out of the hole? Well, according to Dave Ramsey — radio personality, author and personal finance guru — the data from his world of personal financial advice is not encouraging: Most people who consolidate their debt are back in trouble within two years. Mr. Ramsey also says that even with the bailout, Greece will still be spending more than it earns. He says Greece needs to have a fiscal awakening before it can start to pull itself out of debt.
Thus, even after the crisis... what else does it take for Greece to realize this problem?

A bubble in China?

In the April's 19 BusinessWeek issue Charlie Rose had an interview with Jim Chanos, who is a hedge-fund manager and the president and founder of Kynikos Associates which is an investment company that specializes in short-selling. (short-selling is simply a way of speculation in which individual A borrows assets (bonds, stocks, or any type of security) from individual B and sell those assets to individual C. Individual A is expecting the price of those assets to go down in value to buy them back at a lower price and return them to individual B. In the mean time making a profit from selling those assets to individual C. Please keep in mind that it could work the other way in which those assets go up in value and need to be returned to individual B at a loss to individual A).

The interview focus on the risk of a bubble in the real estate market in China. According to Jim Chanos China's GDP is 50% to 60% dependent on construction. Also, China gives a lot of incentives and rewards to keep GDP growth increasing and thus, according to Mr. Chanos, the easiest way to do this is by just putting another building. However, the problem is not just construction, the problem is that the cost of these condos and offices is increasing compared to how much people actually make in China. He gives the example in which the cost of a condominium to the average Chinese two-income couple is around $100,000 to $150,000 U.S. This couple probably makes combined $7,000 to $8,000 a year. Thus, buying something when it is unable to be paid with the actual income earned is really dangerous, as it has been seen in the U.S and/or Dubai.

Putting this on perspective it is also important to mention that no one single country is exempt from a crisis. Mexico 1994, Asia 1997, Argentina 1999, and so many others. The important thing to keep in mind is to start thinking how to deal with it.

Taxi Drivers in Las Vegas, An Economic Indicator?

So... I went to Las Vegas this past week. Besides watching some shows and eating really good food at great prices (ONE POUND steak dinner for $9.90!!) , I was paying attention to the volume of people that enter into this city. This is a constant event: people checking in and checking out of thousands of rooms in the hotels and casinos. Hundreds of people walking in Las Vegas strip, going into clubs, restaurants, shows, casinos, and so on.

Here is something I found interesting as I talked to a taxi driver from Hooters to the Luxur. As I was waiting to get to my destination I asked the driver how business were doing with the recession. He answer me that one way to know when Vegas was doing bad was by watching the time it takes for a cab to pick up a passenger. He told me that when the economy was doing good, it would take five to ten minutes for a person to be able to get a cab. However, now it takes 45 to one hour to a cab to pick up a passenger.

I found this interesting since for me it seemed busy night. After watching so many people in the street and in the casinos I thought it was a good night for Las Vegas businesses. I guess I was far off from it.

The Economics of LA's Street Food Vendors

For those of you that know LA, and for those of you who are Hispanics or Latinos, I found something interesting while I stopped to buy a delicious and refreshing Mexican style ice cream with one street-vendor around Long Beach California. Yes, one of those little merchants that sell a wide range of products, from CDs, shirts, "tenis", and DVDs, to elotes, churros, and chicharrones.

Well, even though it seems that this is an "underground" economy, in reality is a pretty complex, challenging, and most of all COMPETITIVE market. I know we live in an economy where billion dollar corporations like Walmart, Costco, and Kroger, among many others, seem to provide all those goods that people need. I know we live in an economy where billion dollar mergers and acquisitions occur not only domestically but globally. However, it is interesting to notice the economics that exist in this "underground" economy, not only because its being around for a while, but because it is expanding through the implementation of bright business strategies and the forces of the economic theories that we learn on school.

So, what is it that called my attention?
To a degree was this conversation I had with the ice cream vendor. He said, and I paraphrase, "see... its really competitive in LA. You cannot start something new because everybody will copy your idea within a week. We are too many, you can't go a whole street trying to sell something before running into somebody else selling the same thing. Thus, we now are driving outside LA to sell our goods. We move into these new neighborhoods where there is no too much competition, we sell during the day, and then we go back to LA."

This is what called my attention, the fact that these small merchants get together to move their business, after taking a look to competition, into a new market. The beauty of a free market in action.

We are not talking of whether is legal or illegal, what i am saying is that it is interesting to observe how competition reduces prices dramatically, how the difficulty of legal permits forces them to think strategically and to come up with new ideas to sell their products.

See, if a company decides to go abroad and relocate their business its call off shoring. These companies do so because they take into consideration some of the same factors that occur with street vendors. Yet, corporations have a bunch of university graduates thinking about the strategy. These are only street vendors, some with only middle school education, and yet they are implementing strategies in account to their business environment.

For example before the ice cream vendor could move to whatever neighborhood he wants to go, he needs to think about his cost, his possibilities of revenue, and the opportunity of market share. He needs to think about getting a group of vendors (partnership) to reduce the gas cost and move to areas where other competition is minimal. These vendors take into account, subconsciously, the political, legal, technological, and economic situation, and then strategically act upon it to improve their business, their lives, and their future.

This indeed fascinates me.