Published by Minyanville
The race between Agustin Carstens, Mexico’s central bank governor, and Christine Lagarde, France's finance minister, for the leadership of the International Monetary Fund (IMF) is about to enter its final week. Carstens on Tuesday appeared in front of a 24-member IMF interview panel, playing up his skills in consensus-building and his diverse experience in dealing with economic crises.
Carstens also talked of his experience in debt crises, having worked at Mexico’s central bank during the Mexican peso crisis of 1994. He is seen as the underdog behind Lagarde and has been keen to push the idea that the organization should not be run by a European head.
Eduardo Garcia, founder of Sentido Comun, a business website based in Mexico City, told Minyanville that he feels that while Carstens has “put up a good fight,” he is unlikely to win against the backing of Europe, and most likely the US, that Lagarde has.
Unity from the emerging market economies such as Brazil, India, China and Russia has been non-existent and many feel that this is the one thing that could have won Carstens the bid. "We are trying to consolidate our position where we can take a view," Indian finance minister Pranab Mukherjee said dryly at the end of May. India and many other emerging markets issued a statement condemning the selection process which has always led to a European head. However, they have failed to band together.
“It does show you how artificial is that BRIC status,” says Garcia. “Each country has its own agenda.”
Carstens has said that though he may not win this time round, the road may be paved for a future non-European IMF. “He had very little to lose by campaigning this time around, even though when he most likely knew his chances were slim,” adds Garcia. “I think he rocked the boat enough to get the ball rolling and he might be in a better position to catch it next time around.”
Lagarde similarly spoke to the IMF interview panel earlier this week. “I stand here as a woman, hoping to add to the diversity and balance of this institution,” she said. “I stand here as a finance minister who has been tested in times of crisis.”
Mexico Bank Credit at Turning Point?
Ratings agency Moody’s has said that bank credit in Mexico may be at a turning point as banks have greater incentives to lend in the low-interest environment. The government is also sponsoring and guaranteeing loans for smaller borrowers, as well as looser lending requirements for small business.
Mexican banks have repeatedly been hit by big losses on loans and, as a result, are very conservative when it comes to lending, compared to their peers across the region, according to Dow Jones.
Cement-manufacturer Cemex (CX) has, however, scrapped the sale of eight-year bonds thanks to the volatility of the global market. The bonds were meant to be sold to repay a $15 billion bank loan in 2009 that saved it from default.
The Mexican giant has been battered by a US slowdown and current events in Greece are adding to a difficulties for higher-yielding companies to sell bonds.
Mexico Drug Cartel's Mendez Arrested
Meanwhile, Mexican authorities are making headway in their war on drugs with the arrest of a leader of the quasi-religious and incredibly notorious La Familia cartel. Jose de Jesus Mendez, also known as "El Chango" led a faction of the cartel in Michoacán. "With this capture, what was left of the command structure of this criminal organization is destroyed," Alejandro Poire, the government's security affairs spokesman, said confidently. However, often as one cartel leader is captured or killed, many others fight to fill the power vacuum, causing ever-more violence.
“It's the case of the 'Sorcerer's Apprentice,'” David A. Shirk, who studies Mexican organized crime and politics at the Trans-Border Institute, a San Diego think tank, poetically told the Wall Street Journal. "Each time you break brooms, things get more out of control."
President Felipce Calderón has admitted that his war on drugs strategy needs some work. He was speaking with a prominent Mexican poet, Javier Sicilia, who heads the Movement for Peace with Justice and Dignity. The president, whose term since December 2006 has been blighted by the drug war and 40,000 deaths, has agreed to create a commission to “work on behalf of the victims” as well as on a new strategy. Sicilia’s son was murdered by gangsters in late March.