El clima para hoy en Zipolite
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Sunday, March 12, 2023
Go, super peso, go? If you earn your money in dollars but live in Mexico, it's hard to know how to feel about the improving performance of the peso.
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Go, super peso, go?
Yay?
If you’re like me and earn your money in dollars, a position that most Mexicans see as plenty enviable, you might have conflicting worries of guilt and alarm at the improving performance of the Mexican peso this year.
Gone are the days of getting 21 pesos or more for a dollar…and coming are the days of – gulp – possibly getting 17 or so. (Don’t ask me when or for how long; most of my research turned up such wildly different predictions that anything I repeated here would be ultimately untrustworthy).
All in all, it’s still a great exchange rate; when I first came to Mexico back in 2002, the peso-to-dollar rate was roughly 10-to-one. But the peso’s recent strength has come as somewhat of a surprise, and if the peso happens to get even stronger, a lot of we dollar-earning immigrants are going to have to think very hard about how to reduce our budgets to accommodate a not-insignificant reduction in our spending power.
Why is this happening? Honestly, I don’t know, and I’m certainly not the person to explain it. Whenever I try to make sense of anything in the world of finance, which is basically a collectively agreed-on imaginary concept symbolized by pieces of paper and metal coins (and digital numbers now too, I guess?), I pretty much go brain dead from boredom.
The above article cites higher remittances, increased investment and spending from foreign countries, a weakened dollar, and high official interest rates. How those things translate to currencies being “worth” more or less is not what I’m here to discuss.
My biggest question is regarding how this will affect people “on the ground” who don’t spend their days in the world of the stock market.
I’m on the ground, and can confidently say that things have gotten mighty expensive over the past couple of years, with many food items and household goods nearly doubling in price. Over the past couple of months, it’s done so simultaneously with a reduction in the number of pesos my dollars are worth.
Though there are claims that there’s an end in sight (to inflation, anyway), I don’t think most of us are seeing it. I’m not optimistic that consumer goods will get cheaper; the best I can hope for is that prices will stop rising so quickly. That said, I’m always open to being pleasantly surprised.
Please, finance gods? The 99% of the world could really use some mercy.
But, to me, the bottom of the article on inflation that I cited two paragraphs above says it all: “’Companies’ hesitancy to cut and/or reduce the pace of recent price increases as the economy remains resilient and cost pressures abound’ … could affect the pace at which inflation declines.”
What is inflation, I suppose, if not a feverish upward-bound tornado of prices? On the one hand, the things that companies need to make and sell their products become more expensive, and that expense is most often passed on to consumers with a shrug and an “Inflation, man — we know it’s rough, but what can we do?”
Having shareholders absorb some of those blows in order to keep the same amount of food on families’ tables would simply not be playing the game of capitalism correctly, and they’ve got to have enough money for universe-sized bonuses for the corporate elite, after all!
The problem, of course, is that most of us are not big, important shareholders or CEOs of giant companies. Most of us are also not getting salary or wage increases as a result of these higher prices, and few corporate decision-makers are saying, “Gosh, I guess we’d better pay our workers more now, eh?”
There’s no “rising tide lifting all boats” here; the rising tide is simply drowning some people and keeping most others treading water really, really hard.
Is this really the best we can do, economic system-wise?
None of my Mexican friends (except the person that I personally employ) have received any pay increases as a result of rising costs, and I certainly haven’t either, though admittedly, I could tread water a lot longer than most. I suspect that a slowing inflation is more the result of getting to the top limit of what people are able to pay than it is the wizardry of raising interest rates.
As already pretty freaking privileged immigrants, we are not entitled to a special exchange rate, of course; there will be no “hazard pay” to fight the effects of a weakening dollar and out-of-control inflation. Most of us are already giving ourselves special economic treatment simply by choosing to live in a place without fully embracing the reality of its employment economy (for ourselves, anyway). We’re “gaming the system” in a way; but as many of us are learning, there’s no guarantee that the system will continue to play nice with us.
Well. As any good Buddhist will tell you, the only constant out there is change.
So we’re finally facing it. This is the risk of working in a currency that’s stronger than that of the country in which you reside: there’s no guarantee the low cost of living is going to stay that way.
All Mexicans of a certain age have lived through some pretty serious depreciations of their own currency. I imagine there might be some out there who see this weakening dollar as a bit of cosmic justice, and, hey, they might not be wrong about that.
Still, most of us non-wealthy people are in the same boat. The difference for those of us who haven’t been fully participating in the Mexican economy is that the water’s coming up to the top deck where we’ve been luxuriating; we’re not used to feeling this financially nervous.
Anyway, I’ll be having some humble pie tonight for dessert — if I can find it at a good price.
Sarah DeVries is a writer and translator based in Xalapa, Veracruz. She can be reached through her website, sdevrieswritingandtranslating.com
Saturday, March 11, 2023
Mexico’s history — and perhaps its future — is written in silver Mexico’s history — and perhaps its future — is written in silver Although Mexico did, and still does have, gold, its vast deposits of silver have long been central to its history and economy.
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Mexico’s history — and perhaps its future — is written in silver
For all the hype about “Aztec gold” in Disney’s Pirates of the Caribbean, Mexico’s classic measure of wealth has been silver — and it may be its future.
Prized equally on both sides of the Atlantic, Tenochtitlán overlords demanded the metal as tribute from places like Taxco, Guerrero, long before the Spanish arrived.
When conquistador Hernán Cortés entered the capital, Moctezuma hoped to placate him with gifts, including large quantities of gold and silver. However, the strategy backfired, making the Spanish more determined to take over.
Although Mexico did (and does) have gold, its vast deposits of silver have been central to its history and economy since.
Mexico’s first boom in silver production ran from 1555 to 1580 as the Spanish rapidly ventured out from Mexico City to establish mines in places well-known today: Taxco, Guanajuato, San Luis Potosí, Zacatecas, etc. They were often guided by the local indigenous people. A get-rich-quick mentality meant that other economic activities in Mexico would develop slower.
Lacking machinery, the Spanish pressed the indigenous people for backbreaking digging, but they did introduce more-efficient mercury refining. The Spanish crown got miners coming and going — Spain was the only reliable source of mercury, plus miners had to pay a percentage of the refined silver.
As Mexico produced far more silver than it could possibly use, the metal became the basis of currency here, in Spain and even some other parts of the world. The first colonial money was the real, later the peso, both originally set up as units of silver.
With the easy-to-reach deposits exhausted, mining waned but never ended through the rest of the colonial period. When reachable ore was depleted, some mining towns like Guanajuato survived, and even thrived, as commercial centers on main highways. But much of mountainous Mexico is dotted with former mining towns that still struggle today.
The silver flowing eastward over the Caribbean was a huge attraction for Europeans who either did not find precious metal outside of Spanish America or could not establish large colonies. Piracy thrived, with isolated islands and the coast providing certain Englishmen, French and Dutch refuge, which is one reason why these languages can be found in various parts of the Caribbean.
Mexico’s independence freed its mining from Spanish control but did not resolve its technological or economic issues. The century is marked by civil war and invasions, which made large-scale mining almost impossible.
Despite its serious faults, the dictatorship of Porfirio Díaz in the last decades brought stability and foreign investment in heavy mining machinery. Supposedly depleted mines were reworked farther downwards, and new mines were opened. This second major boom would last into the Mexican Revolution and made its mark culturally in places like Pachuca, Hidalgo.
Silver was the country’s most important mining export until the discovery of oil, most being sold to the U.S. and Europe. Today, Mexico is still the world’s main exporter, producing over 135 million ounces of refined silver in 2022.
Most of Mexico’s mining continues to be done by foreign companies: U.S. and Canadian firms have technologies to dig even deeper and refine silver from old slag heaps. Almost all this mining is done in the northwest, in states such as Sonora, Chihuahua, Coahuila, Durango and the main producer — Zacatecas.
These operations are not without controversy. There are longstanding complaints that foreign companies do not respect Mexican laws regarding the environment and workers’ rights. Communities near mines have clashed with both companies and the government.
Geologist Sol Pérez Jiménez of of the National Autonomous University states simply that there is no such thing as environmentally friendly mining; it negatively impacts agriculture, water supplies and community health.
Nonetheless, from 2010 to 2017, mining projects grew from 677 in 2010 to over 1,209 in 2022; 1,190 are foreign-operated.
With all this silver, it may be surprising that the peso is no longer backed by it. As late as the 1940s, 95% of money in Mexico was coins consisting of at least some silver content, but massive inflation in the 1980s prompted the government to mint and print money without it.
Asociación Cívica Mexicana Pro Plata asserts that this makes Mexico too economically dependent on the dollar, and the organization advocates a return to a silver-backed peso. Business magnate Hugo Salinas Price agrees, saying that “the dollar is on its deathbed” and that silver and gold are crucial for Mexico in a tumultuous world.
Silver is important to Mexico in at least one other way — tourism. Many Pueblos Mágicos in the mountains of central Mexico are former mining towns. During their boom years, impressive houses, churches and other structures were built, then later abandoned. The result is man-made charms located in natural scenery. Pueblos of this type include Mineral del Monte, Real del Monte, Tlalpujahua and Mapimí.
Several tourist routes connecting old mining towns with other attractions include those in the Sierra de la Cacachila in La Paz, Baja California Sur, and Taxco and Olinala in Guerrero. But the most important of these is Camino Real de Tierra Adentro, a UNESCO World Heritage Site. It connected major mining centers from Santa Fe, New Mexico, southward to Mexico City.
Even if the mines were good and done many years ago, there are towns that use their mining history to maintain a silverwork industry, especially in jewelry. The most famous case is Taxco, although, interestingly, their silverwork is a revival spurred by American William Spratling.
Perhaps a better, thoroughly native tradition is Mazahua silver earrings from México state, which were originally made from coins saved by prospective grooms then served as “wedding rings.”
Leigh Thelmadatter arrived in Mexico over 20 years ago and fell in love with the land and the culture in particular its handcrafts and art. She is the author of Mexican Cartonería: Paper, Paste and Fiesta (Schiffer 2019). Her culture column appears regularly on Mexico News Daily.
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