Thread: Will Mexico Fail In 2009 or 2010?

Will Mexico Fail in 2009 or 2010?


December 31, 2008 | From theTrumpet.com

A brilliant oil bet may pay off for Mexico. But time is running out. By Robert Morley

Mexican officials could be left looking pretty smart if the price of oil keeps falling. Earlier this year, Mexico locked in contracts to sell its oil for $70 per barrel. Since the market price for a barrel recently fell to $35.35 per barrel, America’s largest trade partner south of the border is raking it in. Unfortunately, the fun is about to end for the U.S.’s Mexican neighbors—and that has big implications for America.

Oil is the single most important revenue stream for Mexico. A whopping 40 percent of its budget is derived from oil sales. And as the third-largest supplier of oil to America, most of it heads north to gas stations across the U.S.

However, Mexico could be facing a serious problem.

The Mexican government needs $70-per-barrel oil prices to balance its budget. For now, government spending is covered. But by the end of 2009, its fixed-rate contracts to sell oil at $70 will have expired.

If oil prices are still low by the end of next year, the government could be in real trouble. If oil had to be sold at today’s prices, almost 20 percent of the government’s budget would disappear.

Falling oil prices have already taken their toll on Ecuador, which announced that it would default on its national debt. According to the analysts at Stratfor, Venezuela needs oil at $120 to pay for all its social programs. And since Venezuela recently announced it would be “nationalizingâ€

That country is already in the midst of social upheaval. Even their own officials are running across the border so they won't be killed by drug cartels. A huge cut in the budget would probably mean that more of those charged with fighting the war on drugs would turn to better money.
Build the border fence fast and spend all those dollars we are throwing into Iraq on making sure we have enough border agents.

We should seal the border with Mexico, stop buying oil from them and tell them we won't resume buying from them or give them any help at all until they start to make the necessary reforms to make conditions in their country such that their citizens won't feel the need to sneak across the border into our country.

Mexico is already a failed state and........... WE, because of our VERY corrupt Politicians in DC are this close I ------- I to being a Banana republic and a failed state.... watch for the fireworks to begin in March .. it will get real bad, real quick

Great article!