Sunday, February 15, 2009

With My Mind On My Money and My Money On My Mind

Looks like we're gonna need some more trash bags:

A landmark intervention by the Mexican central bank to defend the battered peso is slowing its decline, but the currency is seen weakening further as Mexico slides into recession.

The bank startled markets last week by making direct U.S. dollar sales to brokers for the first time in more than a decade to prop up the sickly peso after it hit a historic low of 14.70 to the dollar...

“All the factors that justify a depreciation of the peso are operating,” said JP Morgan's chief Mexico economist Alfredo Thorne, who expects the peso to soon break past 15 per dollar.

As great as all this is for the gringos, a major slump in the peso will create real hardships for tens of millions of Mexicans. A year and a half ago, when the price of tortillas rose by about three stinkin' pesos per kilo, there was revolution in the air. If that ever happens (and we do believe we're due, no?) we'd hate to be a gringo sitting on a half-dozen trash bags full of cash, know what we mean?

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