NOW WHAT? WE HAVE THE RECESSION. HOW DO WE GET OUT?
NOW WHAT? WE HAVE THE RECESSION ON US. HOW DO WE GET OUT OF THE RECESSION SUCCESSFULLY? AS I WROTE BEFORE, MY PERSONAL OPINION, THERE IS A NEED FOR THE WORLD TO REQUEST LOANS TO THE BANKING SYSTEM. AS UP TODAY, HALF OF THE NATIONS HAVE REQUESTED LOANS TO SURVIVE THE INCOMING RECESSION. THE NEED OF CASH LIQUIDITY IS HIGH, AND MOST OF THE NATIONS, TAKE AWAY SOME EXCEPTIONS, ARE SHORTS OF CASH LIQUIDITY.
THE UNITED STATES HAS ALREADY TAKEN SOME POLICIES TO COPE WITH THE INCOMING RECESSION (APRIL 2020). THE UNITED STATES HAS RELEASED FUNDS, LIQUID CASH, TO THE GENERAL POPULATION UNDER CERTAIN RULES AND LEVELS. THE PHASE 2 OF THE POLICIES ARE IN CONGRESS. THE PHASE 2 WILL RELEASE AID TO THE SMALL BUSINESSES. POLITICS IS HOLDING UP THE AID, LET'S KEEP IN MIND THAT AN ELECTION IS AT THE DOOR. THE COUNTRY WAS RUNNING AN EXCELLENT ECONOMIC PROSPERITY FOR THE LAST THREE YEARS, AND THE VIRUS STOPPED AND REGRESSED THE OBTAINED GROWTH OF THE LAST THREE YEARS.
SOUTH OF THE BORDER, THE POLITICAL FIGHT IN MEXICO IS A LOT HARDER. THERE IS A CLEAR FIGHT BETWEEN THE EXECUTIVE POWER AND THE WHOLE PRIVATE INDUSTRY. THERE IS A CLEAR SEPARATION BETWEEN THE 32 GOVERNORS AND THE EXECUTIVE POWER. THE CONGRESS IS CLEARLY DIVIDED AMONG THEIR PERSONAL INTERESTS AND THE NATIONAL PRIORITIES. THERE IS NO NATIONAL CONCENSUS ON HOW TO SEEK NATIONAL SOLUTIONS. THERE IS A CLEAR DIVISION BETWEEN TWO FIELDS, LIKE WATER AND OIL. THE PROBLEM IS THAT THEY ARE RUNNING AGAINST TIME. ONCE THE VIRUS' CURVE BEGINS TO FLATTEN DOWN, THE REGRESSIVE TIME STARTS FOR THE BEGINNING OF THE ECONOMIC RECESSION. NEEDLESS TO SAY, THE COUNTRY IS ALREADY IN A NEGATIVE ECONOMY ALREADY SINCE THE END OF 2018.
EX.- YOU OWN A STORE, AND SALES IN YOUR NEIGHBORHOOD COLLAPSED (PEOPLE ARE NOT SHOPPING). YOUR NEIGHBORHOOD'S UNEMPLOYMENT GROWS, AND YOUR SALES GO DOWN, SHOPS AROUND NEIGHBORHOOD STOPPED WORKING, AND CLOSED. YOU HAVE SAVINGS FOR A MONTH. AFTER THE MONTH, YOU LET GO YOUR EMPLOYEES, YOU CANNOT PAY THEM ANYMORE. YOUR LAST RESOURCE IS THE BANK BEFORE CLOSING THE BUSINESS FOR GOOD. SO, YOU GO TO THE BANK, AND REQUEST A LOAN, THE LOAN'S GRANTING WILL DEPEND IN PART IN YOUR ABILITY TO PAY, IN THE CERTAINTY TO PAY. IF THE BANK'S ANSWER IS A NEGATIVE ONE, YOUR ONLY HOPE IS THAT THE FAMILY WILL ASSIST YOU, OR THE GOVERNMENT'S ASSISTANCE , IF ANY EXISTS. UNDER CURRENT CIRCUNSTANCES, THIS EXAMPLE IS MULTIPLIED BY MILLIONS. MORE THAN HALF OF THE NATIONAL GDP IN BOTH COUNTRIES IS PRODUCED BY THE MAMA-PAPAS' BUSINESSES. WITH NO CERTAINTY OF WHEN THE MEDICAL SITUATION (CORONA VIRUS) IS GOING TO BE OVER, OR AT LEAST, CONTROLLED, THE GOVERNMENT NEEDS TO CLEAR THE SITUATION. Y=C*I*G*X-M. GDP HAS COLLAPSED, CONSUMPTION IS AT A HISTORIC LOW, INVESTMENT HAS STOPPED, AND THE NET EXPORTS ARE LOW OR GONE. THIS IS TRUE FOR BOTH COUNTRIES. GOVERNMENT IS THE ONLY HOPE.
A.-ONE WAY TO DO IT IS WITH THE ISSUANCE OF GUARANTEED STATE AND FEDERAL LOANS. THESE LOANS WILL HELP THE BUSINESSES RESTORE THEIR ECONOMIC ACTIVITY. (SIMILAR TO A CURRENT STUDENT LOAN. CURRENTLY, A STUDENT THAT IS IN NEED TO FINANCE HIS COLLEGE-UNIVERSITY, HE GOES TO A FINANCIAL AID OFFICE IN THE COLLEGE OF HIS CHOICE. HE REQUESTS A GOVERNMENT GUARANTEED LOAN IN ORDER TO FINANCE HIS DEGREE. IF HIS INFORMATION IS ACCEPTED, A PARTICULAR BANK LOANS THE AMOUNT OF MONEY THE STUDENT NEEDS TO FINANCE HIS DEGREE. IN EXCHANGE, THE STUDENT IS RESPONSIBLE TO PAY BACK THE LOAN IN A TEN YEARS PERIOD AFTER GRADUATING FROM COLLEGE. IN THE CASE WHERE THE STUDENT FAILS TO PAY-BACK THE LOAN ON TIME, THE GOVERNMENT PAYS THE BANK. THE GOVERNMENT THEN TURNS AGAINST THE STUDENT, AND COLLECTS THE LOAN PLUS THE INTERESTS). THIS SYSTEM HAS WORKED WELL SINCE THE 1960S IN THE UNITED STATES, AND IT HAS PRODUICED THE BIGGEST COLLEGE GRADUATION SUCCESS. THE GOVERNMENTS ARE IN THE URGENT NEED TO REQUEST LOANS TO THE WORLD ORGANIZATIONS CREATED AFTER THE 1929 GREAT DEPRESSION AND WW2. SOME NATIONS ARE WORSE THAN OTHERS, BUT THE NEED IS THE SAME. THE FEDERAL LEVEL GOVERNMENTS MUST OBTAIN LOANS TO SPREAD THE CASH LIQUIDITY THROUGH ITS REGIONS OR STATES.
THIS FEDERAL ASSISTANCE MUST GUARANTEED; A FIXED PERIOD OF TIME, A FIXED INTEREST, A FIXED MONTHLY PAYMENT, AND VERY SIMPLE RULES. THE OBJECT OF THIS LOAN IS TO HELP, NOT TO GREED. THE GOVERNMENT MUST PROVIDE THE SECURITY THAT IS NEEDED FOR THE SEVERE SITUATION.
B.-IN THE UNITED STATES, TO REHIRE TOTALLY OR PARTIALLY THE EMPLOYEES THAT WERE LOST IN THE CRISIS. SO FAR, IN THE UNITED STATES, THERE ARE MORE THAN SIX MILLION UNEMPLOYED PEOPLE THAT LOST THEIR JOBS SINCE THE CORONA CRISIS STARTED, (NOW 04/2020).
ON THE SOUTH OF THE BORDER, THE COUNTRY LOST 350,000 IN ONE MONTH (03/2020). IF CONGRESS PASSES THE SECOND AID PACKAGE, THE SMALL BUSINESS AID PACKAGE, THERE IS A CHANCE FOR THE AMERICAN SMALL BUSINESS TO SURVIVE THE POST-CORONA CRISIS. ANY DIRECTED HELP IS BETTER THAN NO HELP. IN THE CASE OF MEXICO, TO RESTORE THE EMPLOYMENT LEVELS; THE LEVELS PRIOR TO THE PRESIDENTIAL ELECTION OF 2018. HERE, THE CORONA CRISIS IS EXPECTED TO PEEK IN THE MONTH OF MAY, 2020, THAT IS, MEXICO IS BEHIND TWO MONTHS IN THE CORONA CRISIS PROGRESS. THE AMOUNTS OF UNEMPLOYMENT ARE EXPECTED TO GROW AS THE CORONA CRISIS PROGRESSES THROUGH OUT MEXICO.
THERE ARE SEVERAL PROGRAMS USED IN THE PAST THAT WORKED WELL TO RESTORE EMPLOYMENT. IN ALL OF THEM THE INCLUSION OF ONE OR MORE FEDERAL GOVERNMENTS WAS NEEDED. ONE VERY SUCCESSFUL GOVERNMENT PROGRAM IS THE INTERNAL INFRASTRUCTURE PROGRAM. ANOTHER ONE IS THE MILITARY PROGRAM. THE LAST ONE CAN BE THE INTERNATIONAL MIX OF THE TWO PREVIOUS PROGRAMS.
C.- INTERNAL INFRASTRUCTURE PROGRAM. THE RE-STARTING OF THE ECONOMY AT THE GOVERNMENT LEVELS INCREASES THE NECESSARY DOMESTIC CONSUMPTION AT COUNTY-STATE LEVELS. IF THE FEDERAL GOVERNMENT BORROWS MONEY TO SPEND THIS MONEY ON INFRASTRUCTURE PROGRAMS LIKE ROADS, RAILWAYS, AIRPORTS, BASES, UNIVERSITIES, OR ANY STATE INFRASTRUSCTURAL PROGRAM, THE EXPENDITURE GOES STRAIGHT TO THE CITIES, REGIONS, AND STATES WHERE THE INFRASTRUCTURE IS TAKING PART. THESE MONIES SPREAD THROUGH OUT THE STATE CITIES, AND THEY CREATE LOCAL CONSUMPTION. GROWING DEMAND BRINGS A NEW SUPPLY OF GOODS. IN THE CASE OF MEXICO, ONE HUGE PROBLEM CURRENTLY IN EXISTANCE IS THE PERSONAL STUBBORNNESS OF THE EXECUTIVE LEVEL. CURRENTLY, THE EXECUTIVE HAS FOUR CONSTRUCTIONS IN PLACE, ALL FOUR IN THE SOUTHERN MEXICAN PART. THE AIRPORT CURRENTLY IN CONSTRUCTION IS DIRECTED BY THE MILITARY. AS A SECONDARY LINE, EMPLOYMENT HAS BEEN GENERATED, WHICH IS GOOD. I HAVE WRITTEN ABOUT THE MAYAN TRAIN. IT IS A GOOD PROJECT. THE ONLY COMPLAINT I HAVE IS THAT THE EXECUTIVE WANTS TO COMPLETE THE PROJECT IN ALL STAGES. I HAVE SEEN SIMILAR DEVELOPMENT IN THE SAN DIEGO TROLLEY. THE CONSTRUCTION OF THE SAN DIEGO TROLLEY TOOK THIRTY YEARS. THE PROJECT HAS FIVE LINES; THE BLUE LINE WAS THE LONELY LINE FOR TEN YEARS. THE SECOND LINE WAS CONSTRUCTED IN MONTHS. THE OTHER THREE LINES TOOK TWENTY YEARS TO DEVELOP. THE PROJECT CAN BE CONSIDERED A SUCCESS. IN THE MAYAN TRAIN, THREE LINES CAN BE OPENED ALL AT ONCE. ONE LINE CAN GO FROM THE CITY OF CARMEN, CAMPECHE TO MERIDA, YUCATAN. THE SECOND LINE FROM MERIDA TO CANCUN, QROO. THE THIRD LINE FROM CANCUN TO BACALAR, QROO. WHY? BECAUSE THEY ARE ROUTES THAT ARE ALREADY PROFITABLE, WITH HIGH LEVELS OF INTERNATIONAL TOURISTS. THE OTHER TWO LINES ARE HIGHLY UNPROFITABLE BECAUSE THEZONES ARE SIMPLY VIRGIN, NOT DEVELOPED FOR TOURISM YET ( HAVE YOU HEARD OF CALAKMUL, TONANZIQUE?). THE EXECUTIVE'S BIGGEST MISTAKE IS THE EIGTH BILLON DOLLAR INVESTMENT ON A REFINERY OF A BANKRUPTED COMPANY(PEMEX). WITH THAT AMOUNT, THE EIGHT BILLION, THE EXECUTIVE CAN EXPAND THE RAILROADS IN THE WHOLE COUNTRY. TRAINS FROM TIJUANA TO SOUNTHERN BAJA; TRAINS FROM TIJUANA TO SAN QUINTIN, BC; TRAINS FROM GUADALAJARA TO MEXICALI; TRAINS FROM GUADALAJARA TO EL PASO, OR NOGALES.
D.-THE SECOND PROGRAM IS THE MILITARY PROGRAM. FEDERAL MILITARY SPENDING BRINGS PRODUCTION IN THE MILITARY INDUSTRY, IF AND ONLY IF, THE COUNTRY DOES NOT BUY IN THE INTERNATIONAL MARKETS. THE PROGRAM IS A BIT MORE RESTRICTIVE IN THE JOB SHARING SINCE THE MILITARY USUALLY HAS HIRING RESTRICTIONS.
THE THIRD IS A MIX OF THE PREVIOUS TWO. IN THIS CASE, THIS IS LIMITED. ONLY VERY FEW COUNTRIES CAN DO THIS AT THIS TIME. FOR EXAMPLE, TODAY FRANCE CONDONED THE AFRICAN DEBT DURING THIS CRISIS, TO ALLOW THE AFRICAN COUNTRIES SURVIVE THE CORONA CRISIS.
TIME WILL TELL WHAT THE UNITED STATES WILL DO. THE SAME AS MEXICO.