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Mexico is in the unique position to reap many of the benefits of the decline of the US economy. Because of this, and in order not to violate NAFTA guidelines, the US has gladly allowed national media to play a protectionist role. The US media, over the last year, has falsely portrayed Mexico as being on the brink of an economic collapse. American news media was particularly aggressive in the weeks leading up to spring break. The main reason for all this is money. During that two-week period, over 120,000 young American citizens poured into Mexico and left behind hundreds of millions of dollars south of the border.
Fox news continues to scare people with its focus on kidnapping. In reality, the number one city for kidnappings among NAFTA countries is Phoenix, Arizona with over 359 in 2008. The Phoenix Police estimate that twice that number of kidnappings go unreported, because 99% of these crimes are directly related to drug and human trafficking.
These same protectionist news sources have also misled the public as to the real danger from the swine flu in Mexico and temporarily devastated the tourism business. As of August 2009, there were 45 confirmed deaths recorded in Mexico from the swine flu. During the same eight-month period, there were 57 school children murdered in Chicago.
The "news sources" in the USA have a lack of integrity. By their logic, if 45 deaths from the swine flu in Mexico warrants cancelling flights and cruise ships to Mexico, then they should close all roads and highways in the USA because of a record 43,359 automobile-related deaths in the USA in 2008.
The New Reality
What is just getting underway is what many are calling the "Largest southern migration to Mexico of people and real estate assets since the Civil War". A significant percentage of the Baby Boomers have been doing the research and are making the life-changing decision to move out of the USA.
The number-one retirement destination in the world is Mexico. There are already over 2 million US and Canadian property owners south of the border. The most conservative estimate number of Baby Boomers who are on their way to own property in Mexico for full or part-time living in the next 15 years is over 6 million. Do the math on 6 million people buying a $300,000 house or condo and you will understand why the US government is trying any way they can to discourage this massive shift of investment money into the Mexican economy
Mexico: A Better Economic Choice than China
Another large exodus from the USA is that of high-paying skilled jobs. The job shift in the automobile sector, both |
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car and parts manufacturing, is already known by most investors. In the last few months, John Deere and Caterpillar have been laying off thousands of workers in the USA, and have hired equal numbers in Mexico. The most recent industry that is making the shift is the aerospace manufacturers. In the city of Zacatecas, there is currently a $210-million aerospace facility being built. With the 11 US companies moving there, it is estimated to provide over 200,000 new high-paying jobs in the coming years.
One of the main factors for the job shift south to Mexico instead of China is a realistic analysis of total production, labor and delivery costs. While the labor costs in China are 40% less on average, the overall transportation costs and inherent risks of a long-distance supply chain and quality control issues gives Mexico a distinct financial advantage.
Mexico's Real Economic Future
Mexico has avoided completely the sub-prime problem that has devastated the US banking industry. Mexican banks are healthy and profitable. Mexico has a growing, very healthy middle and upper middle class. The very recent introduction of residential financing has Mexico in the unique position of having over 90% of current homeowners owning their homes outright. In Mexico, there's no real estate bubble. The Baby Boomers market here is between $200,000 and $600,000, with continuing demand.
The other major area where America has become overpriced is in the field of healthcare. There is a whole new wave of business feeding the Mexican economy: “Medical Tourism”. In Mexico today, there are over 56 world-class hospitals being built to keep up with this business.
Mexico's resilience is to be admired. The country is currently sitting on a cash surplus and a balanced budget. The following is a quote from Rosalynn Wilson, president of the Canadian Chamber of Commerce on March 19, 2009: "the strength of the Mexican economic system makes the country a favorite destination for Canadian investment."
Mexico, with the world's 13th largest GDP, is no longer a "Third World Country", but rather a fast-growing, economically-secure state, according to the most recent five-year history of its financial markets when compared to the USA's. Dow Jones: May 2004 - 10,200; May 2009 - 8,200 = 20% loss in five years. Mexico’s Bolsa: May 2004 - 10,000; May 2009 - 23,000 = 130% gain in five years.
As for where to invest in Mexico: For maximum investment returns, the two top choice locations are oceanfront and ocean view. Oceanfont property has always been the bellwether economic gold standard of savvy investors.
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