In 1988, Mexican President Carlos Salinas de Gotari introduced a major economic reform plan to promote the modernization of the Mexican economy.

This plan is one of the templates adopted to establish the "Washington Consensus" two years later, mainly including the following four major aspects: by significantly reducing import tariffs and ultimately signing a free trade agreement with the United States, opening up its own economy and participating in international competition.

Except for the oil, gas and energy industries, most economic sectors are privatized and deregulated; and a stability program aimed at controlling inflation is implemented based on maintaining the close peso and dollar value.

Specifically, the exchange rate of peso relative to the US dollar can only fluctuate within a pre-set small range every day. The range is so narrow that all Mexico's exchange rate policies must consider this very rigid exchange rate relationship between peso and the US dollar.

A broad social and economic consensus was reached between the government, the private sector and the trade union, a well-known economic stability program designed to control the rate of rising wages and prices. This consensus is supported by prudent fiscal and monetary policies in order to keep inflationary pressures in a controllable range overall.

Based on the economic stability plan, it is a key feature of Mexico's reform plan and makes it significantly different from the reform plans of Chile, Argentina and other countries thereafter.

The annual adjustment of the economic stability plan has become an important political event in Mexico. The people are full of expectations, but sometimes they also show anxiety.

The main purpose of this economic stability plan is to gain political support from the Mexican people.

Fidel Velasquez, the legendary leader who led the Mexican Workers Alliance, participates in deliberations and decision-making every year, bringing a certain degree of political legitimacy to Mexican reforms, which other Latin American countries do not have.

Using the exchange rate as a tool to resist inflation deserves special attention.

Since 1976, the Mexican public has linked exchange rate changes to inflation. Whenever the peso depreciates, the prices of imported goods will rise. In response, the union will demand wage increases, which adds additional pressure to price increases. It in turn leads to further depreciation of the peso, higher expectations of inflation and further increases in wages and prices.

In order to break this vicious cycle, Mexican authorities decided in 1988 to peg the peso to the dollar. The idea behind this policy - if the degree of peso depreciation can be limited, inflation expectations will decline, thus bringing inflation in Mexico to a level similar to that in the United States.

Despite the reforms of the Salinas government, the Mexican economy performed poorly from 1988 to the present. The actual economic growth rate was only 2.8% on average, significantly lower than Chile's 7.1% and Colombia's 4.1%, with almost no productivity growth. Although exports increased, they were not particularly outstanding. Real wages were back to the level of 1980, private savings fell significantly, poverty rates continued to be high, and income distribution remained as tilted as in the past.

The positive aspect is that the fiscal budget achieved a balance in 1992, with inflation falling to a relatively high single digit, and protectionism was abolished at all levels.

Even without significant economic effects, Mexico's reforms were still regarded as a case of significant success by financial experts, scholars, the World Bank and the International Monetary Fund, thus gaining unanimous praise.

To some extent, the term "Mexican miracle" was created by these institutions. This enthusiasm and optimism stems from many factors, including many analysts' confidence in the reform measures themselves; others believe that even if the effects are not immediately apparent, they will be effective in the near future.

The "Mexican Miracle" is achieving this popular view with another boost as the Clinton administration's efforts to preach the benefits of the NAFTA to the public and Congress.

After the adoption of the NAFTA, a large number of observers believed that the free trade agreement would significantly accelerate the growth of investment and exports, and the effectiveness of Mexico's reforms would become visible to everyone.

In addition, supporters of reform often cite Mexico's experience as a successful example to demonstrate the feasibility of successful implementation of structural reform under democratic regimes.

In fact, Mexico is often compared to Chile, where many of the successful reform measures were driven by the authoritarian military government.

It is speculated that some people are eager to find an example of successfully achieving market-oriented reforms under democratic systems, especially for American officials, which also helps to form the concept of outstanding Mexico.

In mid-1992, a few months before the Peso collapse, Minister of Finance Pedro Aspe gave a speech at the prestigious Leonel Robbins lecture at the London School of Economics.

The publicly published version of this lecture gave the most comprehensive explanation of the logic followed by Mexico's plan to resist inflation. According to the view that was prevalent in the Mexican government at that time, the fixed peso value would quickly eliminate the inertia of inflation and set an upper limit for price increases.

Mexico's economic stability plan successfully reduced the inertia of inflation, but did not cure it.

This slowed down the inflation rate in Mexico, and in the early 1990s, local prices and costs rose faster than international prices. As the local currency almost completely pegs to the US dollar, Mexico's international competitiveness gradually declined - the amount of pesos that Mexican exporters receive from each dollar of goods remained the same, but domestic costs such as wages, rents, taxes and insurance continued to rise, which compressed the exporter's profit margins.

The Brady plan in 1989 reorganized the debt accumulated by Latin American countries in the "lost decade" and Mexico's foreign debt dropped significantly. Since then, Mexico has opened its own financial markets to overseas investors and began to privatize state-owned banks.

Due to these policies and the feeling that some kind of economic miracle is going to happen in Mexico, the international capital market has turned its attention to Mexico and began to invest in securities issued by Mexican governments and government companies on a large scale.

The resulting soaring capital inflows has allowed the country to finance its growing huge "current account" deficit.

The "current account" balance is the most comprehensive indicator for measuring a country's foreign economic exchanges. From 1992 to the present, this deficit has reached almost 7% of Mexico's GDP on average. Many economists believe that such a high deficit is extremely dangerous.

Because government spending is controlled and the inflows are mainly private, many analysts, especially senior government officials in Mexico, believe that although the scale of capital inflows is very large, there is no need to worry about it.

For a long time, economists have been arguing about the correct steps of economic reform, exploring which markets should be liberalized first and which markets should be deregulated later or slowly. Most experts agree that the optimal order of liberalization should be to gradually abolish controls on international capital flows to avoid sudden increase in liquidity due to huge capital inflows, resulting in artificial appreciation of the local currency.

Contrary to this conventional wisdom, Mexico chose to lift restrictions on international capital flows in 1989, when reforms were just beginning.

Taking such reform steps is a response to many factors, such as Mexico's long-standing tradition of allowing free capital flows; the country's strong desire to join the Organization for Economic Cooperation and Development (OECD), and joining this rich country club requires member states to abandon the barriers to capital flows.

Mexico's strategy is in a strong contrast with other Latin American reformers who followed closely, and Chile has adopted some restrictions on free flow of capital to avoid endangering export competitiveness.

Without restrictions, international financiers were able to allow large sums of funds to enter and exit freely in Mexico. In less than half a year in 1993 alone, Mexico's net capital inflow exceeded 8% of its GDP (half-year), an astonishing figure compared to capital inflows in other countries and historical data in Mexico.

Most of the funds are short-term speculative, investing in stock markets, private sector financial instruments and government bonds.

By 1992, a large number of observers began to argue whether inflation-adjusted currencies or what economists call the strengthening of “real exchange rates” would threaten the sustainability of Mexico’s reforms.

Rudy Dornbush, a professor at the MIT and an expert on Latin America, pointed out: "The imminent problem with the Mexican economy is that the exchange rate is overvalued."

A document published by the World Bank in November 1992 mentioned with an ominous premonition that "opening capital accounts will also expose Mexico to the risk of violent fluctuations in short-term capital flows. Even if domestic economic policies are correct, it will transmit unstable external shocks to the country."

The document also mentioned that Mexico could “treat these dangers by raising interest rates, or devaluing the peso.”

In response to these concerns, the Mexican authorities once again emphasized that most of the capital inflows are private and that government fiscal revenue and expenditure are balanced, so there is nothing to worry about.

Its position is based on three reasons: First, Mexican officials point out that the economic system itself is flexible enough to deal with sudden situations and shocks, such as flexible interest rates and limited exchange rate floating ranges.

Second, rapid productivity gains will soon appear, which will lead to a significant increase in exports and eliminate the "current account" deficit and trade deficit.

Third, the fundamentals of long-term economic growth are still healthy, which should be even more so given the signing of the NAFTA.

Mexican Central Bank Governor Miguel Mancira once told the Economist that trade imbalance is not a problem because it is related to inflows of foreign funds, not caused by expansionary fiscal or monetary policy.

Moreover, after the calculations, the Mexican authorities believe that after appropriate calculations, inflation-adjusted overvalues ​​are not as severe as independent observers think.

However, these analyses do not realize that in the long run, capital flows into Mexico at a rate of 8% exceeding the national total output, which is unsustainable. At a certain point, the rate of capital inflows will slow down or even end abruptly.

Although there is no conclusion on how large capital inflows can maintain this over the long term, analysts can follow some useful guidelines to explore whether there is a deviation from sustainability inflows.

Generally speaking, most guidelines call for the "current account" deficit to be kept below 4% of GDP, and Mexico has far exceeded this level since 1992.

After reading the analysis report, Nan Yi tapped the keyboard a few times and called out major events that would affect the world's political or economic structure this year. The conference statistics table was used to check the parts related to Mexico.

As part of the preparations for the World Human Rights Conference to be held in Vienna, Austria, representatives of Latin American and Caribbean countries gathered in St. Joseph, Costa Rica from January 18 to 22 to adopt the Declaration of St. Joseph.

The Declaration reaffirms the commitment of Latin American and Caribbean countries to promote and safeguard their full compliance with the human rights provided for in the Universal Declaration of Human Rights and the world and regional human rights instruments through their respective efforts and broad, non-selective and discriminatory international cooperation.

The Declaration believes that civil, political, economic, social and cultural rights are interdependent and inseparable. The Declaration emphasizes the relationship between human rights and democracy and development, and believes that the defense and strengthening of representative democracy is the best guarantee for the effective enjoyment of all human rights.

The right to development is an inalienable human right and must take measures as soon as possible to achieve this right through appropriate mechanisms that should take into account the universal right to achieve development in a healthy and ecologically balanced environment.

The Declaration expresses special concern to the situation of children, women, indigenous peoples, vulnerable groups, persons with disabilities, migrant workers, their families and the elderly, calling on the international community to cooperate and protect their rights.

Nan Yi quickly browsed the 31 main texts of the declaration and selected content related to indigenous peoples and drugs. According to the statement in the declaration, countries participating in the drafting of the St. Joseph Declaration have an obligation to improve the current situation of drug rampantness and also to recognize the great contributions of indigenous people to social development and diversity;

Reaffirm the commitment to the economic, social and cultural welfare of the indigenous peoples, and the obligation to respect the initiative and participation of the indigenous peoples; and recognize the values ​​and diversity of indigenous cultures and forms of social organization without undermining national unity.

After watching the World Human Rights Conference, Nanyi continued to look down. The major events that are about to happen this year are directly related to Mexico. The "American Conference" held by the Wall Street Journal in late October; and the "American Summit" proposed by Clinton, whose main purpose is to promote the process of American economic integration.

The "Summit of American States" was only proposed and is still in preparation. Information on whether it will be held, when and where it will be held is unclear.

Nan Yi just thought the name of the conference sounded familiar, but he had no memory of its situation. He called to ask about the theme of the conference in America. Combined with the information he has read and the only memory of the words "Mexican financial crisis" in his mind, he came to a conclusion:

It is necessary to figure out when the Zapataists will cause trouble, the investment costs of Mexico's layout, and even the profits of the first phase will fall on them.

Nanyi subjectively believed that there was a certain connection between the Mexican financial crisis and the Zapataists. The existence of the Zapataists showed that Mexico was still a country with serious social problems, that is, there was political uncertainty in Mexico, which would directly shake the international financial community's confidence in Mexico's investment.

If the Zapataists make some noise, the international financial community's confidence in investment in Mexico will plummet, and then a chain reaction will occur. The most intuitive reaction will be in the exchange rate, and the Mexican peso will definitely fall sharply.

With a quick click, Nan Yi quickly typing on the keyboard, sent an email to the ghosts of the Intelligence Policy Committee and the intelligence team, and copied it to Scarlett. He specialized in his profession, so it would be better for Scarlett to worry about financial strategies.

After sending the email, Nan Yi's work came to an end. He lay down on the bed and turned on the TV. The Mexicali TV station of Telai Visa Group is broadcasting an old drama "The Snare".

This drama is adapted from "No One Lives", a mystery drama. It was introduced into China two years ago. Nan Yi has watched several translated versions of the episode that is currently broadcast. After watching it for a few minutes, Nan Yi began to narrow his eyes, and subconsciously pressed the remote control and fell asleep.

...

"Bang bang bang, bang bang bang bang bang bang bang bang bang!"

Before Nan Yi's biological clock woke him up, something was ringing in the exterior wall of the room. Before he could open his eyes, Nan Yi heard a curse mixed in the noise, "Who is on duty?"

"I."

The voice of the fairy came from the sofa.

"Is that girl?"

"yes."

Nan Yi turned over and picked up his watch from the bedside table and glanced at it. He wanted to curse himself in an instant. It was only four o'clock in the morning. He woke up at this time and had to take a lunch break at noon.

I got up very unhappy and went into the bathroom to wash. Nan Yi took out a rolling bearing and put a steel nail on it as a belly wheel. He lay on the ground to do a set. After a while, he started sitting ups, leaning on the back, push-ups and other fitness exercises.

After doing all this, Nan Yi hung a white towel around his neck, opened the door, and prepared to go to the roof of the hotel to run.

As soon as the door opened, Angelina Jolie, who was still kicking the wall, heard the noise. Her barefoot little feet kicked on the floor and rushed towards Nan Yi.

Angelina Jolie raised her right leg and was about to kick Nan Yi. Nan Yi gave her to the right, raised her left foot, and pointed her toe to the crotch, then quickly pulled away.

"Ah...Peng..."

A scream, the sound of falling from the back followed one after another, and then the scream continued. Angelina Jolie bowed her waist like a shrimp, and kicked her legs like a frog, funny and cute.

"Walking 12 miles northeastwards, there is the territory of drug dealers. If you are really tired of living, you can go there, ten, maybe twenty, and thirty drug dealers have fun with you, you can beg them to give you a pleasure."

After Nan Yi finished speaking, he withdrew his gaze looking at Angelina Jolie and walked straight to the roof. When he was about to walk up the stairs, he suddenly felt that Angelina Jolie's scream was a little wrong. He took a step back and listened intently. His brows frowned. It was not a cry of pain, it was obviously painful and happy.

“Masochist?”

With suspicion, Nan Yi went up to the platform on the roof and started running back and forth along the east and west lines of the building. When he finished his run and went downstairs, Angelina Jolie was no longer in the corridor.

After washing up again, after Eddis Gonzalez got up, having breakfast together, Nan Yi and his party began their boring Mexicali Valley, Jimexicali's agricultural planting area inspection tour.

Mexicali was originally a water-deficient place. Thanks to the water from the Colorado River that led to Mexicali decades ago, this created the prosperity of the city and the prosperity of the Mexicali Valley planting area.

Standing on a high ground on the banks of the Colorado River, Nan Yi held a hydrological picture of the Colorado River in his hand and studied the direction of the Colorado River.

The Colorado River is a major river located in the southwestern United States and northwestern Mexico. The river length is 2,330 kilometers. The entire basin covers 7 states in the United States and 2 states in Mexico, and passes through the vast desert climate zone in the southwestern United States.
To be continued...