April 18, 2008

It is no surprise that the slowing/collapsing U.S. economy has massive reverberating effects on the global economy and countries great small. Interesting too to observe how personal the damage will be in our neighbor to the south, where the second larges source of income is remittances. That is an astounding figure.

Here's a chart

(oh yeah, that means more of them will be coming north, too).

Mexicans Get Less Aid From Migrants - washingtonpost.com

The effects of the subprime mortgage crisis and the downturn in the U.S. economy have cascaded into Mexico, causing a sudden, precipitous drop in the flow of money sent home by Mexican immigrants and highlighting this country's dependence on its wealthier northern neighbor.

In January, the cash transfers, known as remittances, sagged almost 7 percent compared with a year earlier, the steepest monthly dip in at least 13 years, according to Mexican government statistics. Economists here believe the decline in remittances is already pushing thousands into extreme poverty and could lead to a significant increase in migration as desperate Mexicans, deprived of support from abroad, flee to an ever more difficult U.S. job market.

"It is a vicious, perverse circle," Juan Manuel Padilla, a demographer in the economics school at the University of Zacatecas, said in an interview. "Work opportunities here are nonexistent, so this is going to cause more migration to the United States, even though it is getting harder to find work over there...

The drop-off in remittances to Mexico, which economists believe could accelerate this summer if the U.S. economy continues to falter, is swelling into a catastrophe here in the central Mexican state of Zacatecas, which has Mexico's highest migration rate. Hit with particular ferocity are small villages that have been virtually abandoned by all but the elderly parents of migrants. In the Zacatecan village of Lo de Luna, a collection of crudely built brick homes six miles from the nearest paved road, seniors such asErnesto Hernández have been left nearly destitute."

here are some amazing numbers:

"The exodus of whole families has emptied small towns. The populations decreased in 54 of 58 Zacatecas municipalities between 2000 and 2005, according to University of Zacatecas statistics. More Zacatecans live in the Los Angeles area, one of the flash points in the subprime mortgage breakdown, than in the city of Zacatecas, which has a population of 122,000. About 1.8 million Zacatecans and their descendants live in the United States, compared with 1.4 million still in Mexico."

the one question I have after reading this article is why all of these immigrants to the US lost their homes. Presumedly they have been working (since they are sending money back). So were they all fooled into taking out huge loans or did they just not pay their bills? If the latter, why such huge numbers all of a sudden? If the former reason, which I have read a bit about, then obviously the bankers should be sought out and punished. Likely it is a combination of the two. Let's make the bankers pay anyway.

No comments: