05 April 2009

Economic Cow Power

There are so many questions about the current world economic situation and how it deteriorated to the extent that it has that I don't think they will ever be answered adequately. Most of the explanations seem to involve smoke and mirrors of one kind or another that are not fully explainable. How can one wrap one's head around something like that? Let's see...we have bullish and bearish speculation, hedge funds, market derivatives, sub-prime lending, mortgage bundling, excessive executive compensation, outrageous incentive bonuses, tax shelters, insurance schemes, mergers, partnerships, acquisitions, initial public offerings, Ponzi schemes, Fannie Mae, Freddie Mac, and Heaven only knows what else. So what happened to the economy? In short, one day somebody sneezed and the curtain fell and everyone realized that there was no value there, only empty promises, and people began to shout, “Where's the beef?”.

With all of the criticism that Mexico receives in the United States it is ironic to note that at present Mexico is solvent and is not in a recession. This is in contrast to the United States, Japan, and most of Europe. Perhaps here in Mexico there has been so much economic pain over the years that people have finally learned to look at things a little differently. Anyone who has lived in Mexico for a number of years, especially in a small town or community, realizes that people are not so quick to spend money on something unless they have examined it from all sides. When you get out in the sticks money just doesn't seem to matter as much as absolute value does. More often than not goods and services are traded to a large extent and at times no money at all changes hands for goods received or services rendered.

Because we are asking “Where's the beef?” let's examine a situation involving a cow. When a farmer needs to have his old truck motor rebuilt he takes an extra cow that he has down the road to the local mechanic and cuts a deal to get the truck fixed in return for the cow. The mechanic takes the cow down the road to the tailor and cuts a deal to have a new suit made for his son's wedding. The tailor takes the cow down the road to the roofer and cuts a deal to get his roof repaired and on down the road goes the cow doing good wherever it stops until it finally ends up at the “matadero” or “slaughterhouse”. Seems like a shame to kill the cow after all the good it has done but unless the cow dies the bills don't get paid. However, even after the cow dies it is divided up into various cuts of meat that are distributed to butcher shops and restaurants and the parts of the cow keep working until the people of the community are nourished by the cow and it becomes part of their physical well being. So where is the cow? It didn't just disappear. The cow is us. Now THAT is value!


Babs said...

How come people don't live "beneath their means" anymore or "save for a rainy day"? Why? Thakfully, Mexico has not yet become materially driven as is the case in the USA.
Hopefully lessons are being learned. Hopefully.

Alfredo said...

Very nice analogy Bob and totalmente verdadera. Lately, all what you hear in the US is about the bad economy. So scandalous! If they would stop talking about it, people would not know and the cow would be "our value". I had always live in crisis I guess. Never had too much money left over to invest. Most humans live with I believe a dollar a day around the world...are we really in such a bad economic times?

Calypso said...

It is about GREED.


Constantino said...

The problem seems to start when credit cards flooded the mailboxes up north. Anyone as long as they could fog a mirror started charging.
In Mexico, people have lived frugally (most people) for years and have therefore not inflated the phony bubble that has burst up North and other places.
We are lucky, we just got 2 cows, to keep our chickens company. I'm still looking for some goats.....
At least we can eat eggs, chicken and cabrito.
And besides who cares to keep up with the Joneses?

glorv1 said...

We live within our means. We even have two chickens that provide us with eggs. Good post and very educating.

Thx bob for your nice comments on my blog. Truly appreciated.

glorv1 said...

Hi Bob, hope you are having a great day and are feeling well, etc. :)

Bob Mrotek said...

Yes, Gloria, I feel great! Nothing much going on here, etcetera, etcetera :)

YayaOrchid said...

Bob, such a good post; I like that it makes you think. As to Mexico being solvent, how could it not be? People there have never had easy access to credit. Banks only loan to risk free customers. The common citizen has a most difficult time to save up enough for a house or a car. I think the only way for people to have a car is to buy all the used ones which make it across the border or are stolen over here. Ask me how I know. And cars Mexican citizens do have...lots of them! But only the wealthy and well to do have brand new vehicles..

Bob Mrotek said...

First of all, of the 20 countries that were in the G-20 summit at least three of them are not debtor nations. They are Mexico, China, and India. By law, Mexico has to balance its budget. You are right about personal credit thing but the situation is steadily improving. More and more workers have cars and not just junk cars either. Sure there are still lots of poor people and they need better jobs but unemployment is relatively low nontheless, at least there is low paying work available and the people are accustomed to it. Mexico has a great upside potential and potentially a great future. Remember, the turmoil on Wall Street and the financial mess that much of the World is in is an American thing. Mexico has been plodding along and steadily improving and "si Dios quiere" will continue to do so. Don't believe everything that you hear on the news. It is quite tainted :)

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I was born and raised in Chicago, Illinois, U.S.A. I have been living in Mexico since January 6th, 1999. I am continually studying to improve my knowledge of the Spanish language and Mexican history and culture. I am also a student of Mandarin Chinese.