Mexico, while getting little attention in 2008, likely deserved it the most. Factories of large international companies and banks closing due to economic crisis, top officials beingsacrificed in a drug war that cost more than 4000 lives and a new President being thrown into the fire when Mexico has some of the worst problems in generations was the legacy of Mexico in 2008. Whilethis drama has received little attention since February 2008 when it mostly began, it will likely be a defining factor of media attention in 2009.
The economic crisis sweeping the globe has spared nonation, but some are showing remarkable resilience. Mexico's economic performance, for example, has shown tremendous strength. When the U.S. Federal Reserve extended a loan of $30 billion each to thecentral banks of Brazil, South Korea, Singapore and Mexico, Mexico did not touch those funds. It simply reinvested them in Treasury bonds, leaving them in accounts in New York.
This is noaccident. It stems from prudent economic policies implemented after the December 1994 devaluation of the Mexican peso that sent the economy into a tailspin. At that time, President Ernesto Zedillo had been inoffice a few days, and his entire agenda was thrown into disarray by the crisis.
There are several reasons for Mexico's economic resilience. One is the fiscal restraint that Zedillo initiated andthat his successor, Vicente Fox, continued.
Another factor is the windfall oil profits – despite the sudden drop in oil prices. When oil peaked at $147 a barrel last summer, there was disbelief aroundthe world: Would it shoot up to $200 or fall back? The conventional wisdom was that $100 a barrel for oil was the new reality going forward, and there was a frenzy to lock in prices through futurescontracts. Mexican officials at Pemex, the state-owned oil monopoly, didn't believe that price was sustainable; their economic models indicated that, with slacking demand due to the recession, a price...