What's happening on the border?

Implications: At the same time the subject article was running, the New York Times and Los Angeles Times printed articles about the Federales pursuing the gangs on Tijuana’s streets and the mayor taking gunfire at home. This vast country of say 50+ million is looking more and more like its third world cousins to the south in Central America and below the Equator. The government is not in control, it appears, of either the rural or the urban areas.

Analysis: Funding from the Pemex monopoly is abating. The growth areas of the northern maquiladores assembly plants must be suffering from security issues just as they were rebounding as the dollar became increasingly weak and Asian manufacturing became less cost effective. The growth of areas in Mexico devoted to senior or expatriate housing has been put on hold as Americans can afford less and wonder about the dangers from the drug cartels. It’s not just Tijuana but Mexicali, Nogales, Juarez and all the Texas border towns that are areas of concern. The SouthBay section of the San Diego Metropolitan area is certainly affected as it trades across the border. The major border crossings from El Paso to Brownsville are similarly stressed. Phoenix north of Nogales has one of the largest concentrations of undocumented Hispanic/Latino populations bringing not only security but fiscal issues to that city. The area around and south of Tucson, itself one hour south by I-10 from Phoenix in a direct line to Nogales, is perhaps even more impacted. Drive the southern part of the state and you find yourself passing a Border Patrol vehicle every few miles or so. Even then, we don’t have control of these essentially empty areas as Mexican nationals cross the border illegally to work and, more ominously, to transport drugs to our cities. The West is stressed by this interaction with Mexico and it appears that the economic gulf between the two countries is widening. At the same time, the gap between the haves and have-nots in Mexico is widening even more than the gap in the U.S. All this is playing out as America transits from the housing bubble to the next bubble, be it infrastructure or alternative fuels. Interesting stuff, I say. How do you plan real estate developments based on sustainable cash flows when such potential and real unrest exists in an area? The answer is you can’t plan in the face of lawlessness in Mexico except to invest at pennies on the dollar having faith that mankind will enforce civilization in time for you to exit with a profit. That’s not exactly the way the typical U.S. developer can act, so the northern climes of Mexico are perhaps fodder for the reckless only at this time.