Energy | Mining | Trade & Investment | Banking & Finance | Business & Industry | Automitive | Housing & Construction | Retail | Transportation | Telecommunications & Technology | Media & Entertainment | Fishing, Farming & Agriculture | Hospitality & Tourism | Economy | Border & Migration | Crime & Safety | Other

Energy

• Pemex’s Director Considers Company’s Future Unstable
• Mexus Calls For Mexican Reform
• PRI Studies Project To Place 20% Of Pemex Stock In The Mexican Stock Exchange
• New Mexican contract may have to await elections
• Pemex To Issue P$20 Billion On Local Market In Second Quarter 2005
• Pemex Wants Special Authorization To Explore Perdido Fold
• Heerema Wins Bid In Campeche
  
  
  
  Mining
• Merged Southern Peru Copper And Grupo Mexico Earnings May Hit US$900M
• Minera Mexico Prepays US$120M Of Syndicated Loan
  
  
  
  Trade & Investment
• Japan, Mexico Kick Off Free-Trade Pact In Tokyo
• Mexican Finance Minister Mulling Yen-Bond Issuance
• Japan’s Itochu Tire Company Deciding On US$400 Million Investment In Mexico
• Mexico’s Sugar Quota To The U.S. Barely .02% Of Its Output
• Real Estate Investment Through FIBRAS Is Being Prepared
• Mexican Government Submits Securities Law Proposal To Congress
  
  
  
  Banking & Finance
• Bank Of Nova Scotia Looks To Shop In Latin America
• Mexico’s Banco Azteca To Invest $35M On Panama Branches
  
  
  
  Business & Industry
• Nokia To Expand Mobile Phone Production In Mexico
• Transpro Relocates Aluminum Heater Production To Nuevo Laredo
• Mexico Could Begin Production of Small Aircraft
• Japanese Tire Company Yokohama Arrives in Mexico
• Bally Expands Gym’s Globally
• Vitro Issues P$550 Million Debt Backed By Receivables
• Alfa To Delay Spin-Off Of Steel Unit Hylsamex
• Alfa To Rename Fibers Unit After Japan’s Teijin Exit
• Mexican Owners Seek To Keep Management Control Of Cydsa
• Cemex Unloads Great Lakes Assets For $389.5M
• Kimberly Clark Prepares Sale Of Scribe (500 Million Estimate)
• Mexico Leads World In Beer Exports




Automotive
• Mexico’s March Auto Output, Exports Down Sharply On Year
• Volkswagen Creates 1500 Jobs




Housing & Construction
• Geo Expects At Least 54% 1Q Net Profit Growth
  
  
  
  Retail
• Wal-Mart De Mexico March Same-Store Sales Rise 9.5% On Year
  
  
  
  Transportation
• Shareholders Okay Rail Acquisition of TFM
  
• Mexico’s TMM Gets About $600M For Sale Of Railway Unit
• Mexico’s TFM Plans to Sell $460M of Junk Bonds Next Week
• Bombardier Gets Seven Orders For Jets From Latin America
• Mexico Sees P$7.36 Billion In Port Investments This Year
• Mexico Hires French Consultant For High-Speed Train Project
• GAP Airport Group Estimated to Sell Soon at US$700 Million




Telecommunications & Technology
• Verizon Buys Carlos Slim’s Share of MCI
• Telefónica Móviles And América Móvil Compete for Supremacy in Latin America
• Mexican Spectrum Bidding Over, But Allotments Must Wait
• Constellation Seeks Share in Mexican Telecommunications Market
• Three New Information Technology Development Centers Inaugurated




Media & Entertainment
• Grupo MVS and Comcast Corp. Sign Agreement for TV in the U.S.
• Televisa to Expand Its Short Message Business Model to the U.S. Market
• Condé Nast Pulling the Plug on Vogue, Glamour en Español




Fishing, Farming and Agriculture
• Mexican Agriculture Ministry Reports Single Low-Path Case of Bird Flu
• U.S. Opens Borders to Pork Meat




Hospitality & Tourism
• Commission Approves Casino Law Reform




Economy
• Mexican Inflation Probably Rose in March on Higher Energy Costs




Border & Migration
• Immigration Opponents To Patrol U.S. Border; Rights Groups Condemn ‘Minuteman’ Protest
• Senate Opens Door to Alien Amnesty
• Virginia Governor Warner Signs Measure Denying Public Benefits to Illegal Aliens
• Illegal Immigrants Are Bolstering Social Security With Billions
• Remittances Grow 25.17% for the First Bimonthly Period
• Americans May Need Passports to Enter From Canada or Mexico by 2008




Politics
• Mexico City Mayor Stripped of Immunity; Move by Congress Could Force Lopez Obrador Out of ‘06 Presidential Race




Crime & Safety
• Gonzales Visits Mexico Today, Attorney General to Meet with Fox
• Ex-agent Blasts the Immigration and Customs Unit for Obstruction and Endangerment in Mexico
• Reporter in Serious Condition After Being Shot Mexico
• U.S. Warns Tourists About Lack of Police, Lawlessness in Cancun




Commentaries & Opinion
• Let Mexico’s Voters Decide
• Opponents of Mexican Mayor “Risk Turning him into Martyr”
• Mexico and Mr. Lopez Obrador
• U.S. Multinationals Reap Overseas Bounty




Other
• NASA Turns to Mexican Lake for Clues to Alien Life
• Former President Zedillo Named Envoy by the UN Secretary General
• Mexican Tenor Villazon Triumphs in Paris
• Hidden in Home: Kahlo Trove

    Juan Casillas
  +011-525-55-281-8297

   Susana Cervantes
  202-585-6561

The nation’s state-run oil monopoly is “on the verge of bankruptcy,” with total liabilities of US$88.5 billion and an annual investment requirement of US$10 billion, the firm’s top executive said Thursday. “Those factors have us on the verge of bankruptcy, literally, and we need to say so,” the director of Petroleos Mexicanos, Luis Ramírez Corzo, told Latin America’s largest television network, Televisa.

“The financial structure of Pemex is in crisis,” he said, noting that the company has US$45 billion in debt. More than half of that, US$24 billion, is in off-balance-sheet obligations that must be paid to private contractors upon completion of projects. Pemex is forced to resort to such devices by a tax regime that claims more than 60 percent of the firm’s gross revenue for the Mexican treasury.

“In a year or a year-and-a-half, Cantarell, the fourth largest (oil) field in the world, will begin to decline and we don’t have another one like it,” Ramírez Corzo said, referring to the offshore deposit that produces nearly 80 percent of Mexico’s total annual oil output.

The executive said Pemex needs roughly US$10 billion worth of investment just to keep producing at current levels of 3 million to 3.5 million barrels per day. But he placed the onus for solving the problem on Congress, saying that Pemex had already presented lawmakers with proposed tax changes to put the firm on a sounder financial and operational footing. The legislature, he said, needs to “assume its responsibility.”

Pemex generated a record US$70 billion in sales last year and made a “contribution of US$54 billion to the federal government by way of taxes, fees and royalties,” Ramírez Corzo said.

Thus, he continued, the company sent the equivalent of 77 percent of its gross revenues and 103 percent of net profits to the government’s coffers.

The lower house of Congress last year passed a bill easing the fiscal burden on Pemex, but the proposal is still under discussion in the Senate. Ramírez Corzo said that unless Pemex can significantly lower its tax bill or gain ready access to private capital, much of Mexico’s oil will remain under the ground or beneath Gulf waters. He stressed that allowing participation of private firms in Mexico’s energy sector is not tantamount to privatization or a loss of sovereignty.

The Mexico-US Business Committee (Mexus) called Tuesday for a change in Mexico’s laws allowing private investment in the country’s vast oil and gas reserves, especially its promising deepwater prospects in the Gulf of Mexico.

“Tapping into these new sources will require Mexican Congressional approval and increased cooperation with foreign companies that have the technical and financial strength required to undergo such complicated explorations,” said Mexus in a report distributed Tuesday in Washington.

Mexus also called for Mexico’s government to relax the tax burden on the country’s state-oil giant Pemex. The company pays taxes on revenues in the order of 60%, which analysts say prevent Pemex from investing in new exploration and production.

The group also said that Mexico needs to liberalize its energy sector to allow for private investment, especially from the U.S. and Canada. Both those countries and Mexico form the membership of the North American Free Trade (Nafta) agreement.

Mexico ’s Ambassador to the US, Carlos de Icaza, who attended the Mexus report presentation, refrained from making comments on his country’s reluctance to open its energy sector to private investments. “I will make no comments on that, but will just say that energy is a key issue for North America and that it will be addressed by (Nafta) working groups according to the laws of each country.”

With time running out, promoters of the new fiscal regime and the autonomous management of Pemex are focusing on lobbying the said initiatives. The goal is to have the issues voted on before the month is over.

Immediately after, steps would be taken towards an eventual marketability of securities. In fact, the meeting programmed for today between the Pemex Financial Director, Juan Jose Suarez Coppel, and the Undersecretary of Revenues, Ruben Aguirre, with the Finance and Energy Committees of the Senate was postponed until tomorrow.

The reason for the change was due to Suarez Coppel undertaking what was undoubtedly one of the most ambitious presentations ever taken by the state-owned agency before the full PRI representation. The topic relates to a plan to place a minority percentage of the para-state company on the Stock Exchange. The intention is to market 20% of the Pemex’s capital stock.

The transaction would imply raising around US$14 billion, according to what PRI Senators, headed by Enrique Jackson, were informed yesterday. Attending this presentation were, among others, Manuel Bartlett, Oscar Camacho, Laura Alicia Garza Galindo, Emilio Gamboa, Genaro Borrego and Raymundo Gomez Flores. The initiative requires the modification of seven articles of Pemex’s Organic Law, in order to address three topics: the entity’s legal profile or figure, the corporate board of directors, and regulatory issues.

Regarding the first topic there is a need to create a Public Interest Society entity or figure; in the second, to put together a board with 15 members, eight of whom would be independent; and in the third, to modify Constitutional Article 134.

Regarding marketability, the project proposes two series of actions or stocks: A and B, where the securities of the second would be placed in a trust that would only give their holders patrimonial, although not corporate, rights, a mechanism by which the topic of restriction would be overcome, because no rights are surrendered.

The intent is that exclusively Mexican citizens or entities can acquire these shares. The product would be marketed to Afores (pension funds), unions and cooperative societies. However, the fiscal regime topic remains to resolved first.

The head of Pemex, Luis Ramirez, has proposed a new type of contract designed to lure companies to mature fields by paying them in oil. But the so-called “alliance” contract -- which could replace fee-based multiple service contracts (MSCs) -- may have to wait until after presidential elections in July 2006, since the opposition Institutional Revolutionary Party (PRI) is likely to oppose it ahead of the poll, not wanting President Vicente Fox to take any credit.

Facing declining reserves and limited cash flow, Pemex launched the MSCs two years ago to get foreign firms to develop the gas-rich Burgos Basin without violating the constitution, which forbids foreign ownership of energy resources. But they proved unpopular, since companies do not get to keep the extracted gas and are only paid a flat fee. Legal challenges from opposition lawmakers are another deterrent.

Ramirez hopes to use the new contract format initially for the massive onshore Chicontepec field, which holds about 37% of Mexican reserves, as well as in developing Mexico’s estimated 45 bbl. of offshore deepwater reserves.

Pemex Thursday said it planned to raise P$20 billion (about US$1.8 billion) through a commercial paper issue on the local stock market in the sec/nd quarter of 2005. In a filing with the Mexico Stock Exchange, Pemex said the money would be used to “finance infrastructure projects.” The exact timing and the amount of the issue will depend on market conditions, the company added. In all, Pemex is aiming to raise about $8.5 billion this year on domestic and international financial markets. The company raised $9.5 billion in 2004.

The Energy Ministry and Petróleos Mexicanos (Pemex) proposed to Congress the creation of an exception regime in order to allow the state-owned company to undertake alliances with other oil companies in the exploitation of trans-border oil fields, so revealed the Pemex Director. This topic could be brought up once that the changes in the Pemex fiscal regime have been approved.

Ramirez Corzo explained that Mexicans and Americans share a geological structure in the Gulf of Mexico, in the area denominated the Perdido pleated belt, located 40 kilometers from the coast of the State of Tamaulipas, where Americans have worked for 14 years.

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A consortium led by Heerema Marine Contractors of the Netherlands has emerged with an unrivalled US$398 millon bid to transport and install more than 20 offshore platforms for Pemex in the Bay of Campeche. Once formalised, Hereema will work in partnership with Mexico’s Protexa and USA-based J. Ray McDermott to handle and install production units, living-quarters platforms, and drilling platforms. The contract runs for 597 days from 7 May.

Rivals such as Saipem and Global Industries registered to participate in the tender but did not submit bids.

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A newly expanded Southern Peru Copper Corp. (PCU) could post earnings of up to US$900 million this year, chief executive officer Oscar Gonzalez Rocha said Thursday in an interview.

The company could also launch a public share offer on the New York stock exchange once the merger between Southern Peru Copper and Grupo Mexico SA unit Minera Mexico SA is completed, he told Dow Jones Newswires. A public share offer would allow the company to pay down part of a heavy debt load that has worried some analysts.

The merger process, set to start Friday, was approved by more than 90% of Southern Peru Copper’s shareholders in a meeting in Mexico earlier this week. It creates a company that is the world’s largest listed copper mining company in terms of reserves, and the second largest in terms of market capitalization after Phelps Dodge Corp.

Sales of the merged company are expected to be in the US$3.0 billion range this year, especially if copper and molybdenum prices remain strong.

Southern Peru Copper Corp’s sales for 2004 totaled US$1.72 billion, with Minera Mexico’s at about US$1.3 billion.

“This year we expect the profits to be in the order of US$800 million or US$900 million from both, although this depends a lot on prices. It is an estimation,” Gonzalez Rocha said. He also said that the company plans to reduce Minera Mexico’s debt load by some $200 million this year, and that a good part of that had already taken place.

On Wednesday, Minera Mexico prepaid US$120 million of a syndicated loan, reducing the interest rate on its debt to Libor plus 112.5 basis points for the next six months from Libor plus 200 basis points.

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Copper company Grupo Mexico said Thursday that mining unit Minera Mexico prepaid US$120 million of a syndicated loan, lowering total debt and achieving savings on interest.

In a press release, Grupo Mexico said Minera Mexico obtained in exchange a reduction in interest, to 112.5 basis points over Libor from 200 basis points over Libor, for the next six months.

The Mexico City-based company, the world’s third-largest copper producer with operations in Mexico, Peru and the U.S., said it used cash from Minera Mexico operations to make the payment, which brought the unit’s total debt down to US$921.3 million from US$1.04 billion.

Earlier this week, shareholders of Southern Peru Copper Corp. (PCU), or SPCC, approved the merger of Minera Mexico into SPCC. The transaction raised Grupo Mexico’s stake in SPCC to 75% from 54%.

BBVA Securities said in a report Thursday that with the merger approved, Grupo Mexico would be able to use SPCC’s unleveraged balance sheet to fund expansion plans at Minera Mexico, which operates Mexico’s two largest copper mines, Cananea and La Caridad.

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Japan and Mexico launched a free-trade agreement today after more than 2½ years of discussions and delays, with Tokyo hoping to boost exports of autos and electronics to North America and Mexico betting it can lure investment and export more farm products.

Mexico ’s Economics Minister Fernando Canales arrived in Tokyo on Thursday and was scheduled to attend a brief ceremony later Friday with top Japanese officials before they convene a joint committee to decide steps to effectively boost two-way trade, the Foreign Ministry said.

The free-trade pact, signed last September, will immediately eliminate 91% of Japan’s tariffs on Mexican goods and 40% of Mexico’s tariffs on Japanese goods. Other tariffs will be reduced gradually over the next 10 years.

Japan is seeking to boost its shipments of autos, steel and electronics, while Mexico hopes to attract an additional US$1.2 billion a year in Japanese investments, generate new jobs and crack open the Japanese market for Mexican pork, avocados and tuna.

Japan ’s only other free-trade agreement is with Singapore.

Mexico has signed 11 free-trade pacts with 42 countries, including those in the European Union.

Shipments between Japan and Mexico have been limited. Last year, Japan’s exports to Mexico were Y561.4 billion (US$5.2 billion), or 0.9% of its worldwide total of Y61.2 trillion (US$572 billion). In 2003, Mexico exported US$1.8 billion in goods to Japan, a fraction of its roughly US$170 billion in exports that year and tiny compared to exports of US$149.6 billion to the U.S.

Mexican officials said they expect exports to Japan to increase by more than 10% a year, and Japanese investment in Mexico could nearly triple from about US$450 million a year.

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Ginowan , Japan -- The Mexican government is considering issuing yen-denominated bonds, the country’s finance minister Francisco Gil Diaz told his Japanese counterpart Saturday, according to a Tokyo official.

Gil Diaz told Japanese Finance Minister Sadakazu Tanigaki that his government “wants to issue Samurai bonds, as it hasn’t done so for some time,” said the Japanese finance ministry official accompanying Sadakazu Tanigaki, following a bilateral meeting between the ministers in Ginowan in Okinawa prefecture. Both Gil Diaz and Tanigaki are visiting Ginowan to attend a three-day meeting of the Inter-American Development Bank beginning Sunday.

The Mexican minister’s comments come at a time when Latin American countries are increasingly tapping the euro-denominated markets as investors are growing eager to diversify their currency holdings away from the dollar and into other currencies.

The Japanese and Mexican finance ministers also agreed that they will make efforts to further strengthen their economic ties through more reform of customs, the official said. The Japan-Mexico free-trade agreement that went effect on April 1 has eliminated 91% of Japan’s tariffs on Mexican goods and 40% of Mexico’s tariffs on Japanese goods.

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Today in Buenos Aires, the Japanese Corporation, Itochu Tire & Rubber will begin analyzing which country it will award a US$400 million investment in order to build a new tire-producing plant. The three finalist countries are Argentina, Brazil and Mexico. There is fear in Itochu’s Mexican subsidiary that politics will negatively influence the final decision.

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The Trade Ministry is preparing an agreement by which the Mexican sugar quota into the U.S. for 2005 will be announced. This quota is established as part of the World Trade Organization accords and will be defined at 10,212 (metric) tons, barely .02% of the country’s total production, which stands at about five million tons. Apparently, this will be the only quota that Mexican sugar producers will get for 2005, since the U.S. has refused to give Mexico additional quotas in accordance to the NAFTA treaty.

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One of the innovations that has been worked on since last year at the Mexican Stock Exchange has to do with channeling real estate investment through the figure of FIBRAS (Reits), a vehicle that, in more mature markets, has allowed placement of real-estate packages, thereby increasing the financial possibilities for this important sector. Although the time foreseen to inaugurate this instrument has phased out, it seems that various stock exchanges have advanced several projects that could be launched soon, when conditions are more propitious. The technical part is almost ready; thus, it is not ruled out that we could see the first FIBRAS bids towards the end of May or June.

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Mexico ’s government submitted a proposal to Congress Wednesday for a new securities law aimed at spurring investment and increasing the number of companies listed on the local stock exchange.

The main thrust of the sweeping reform plan is to attract more risk capital into the country by allowing midsized companies to tap into institutional investor money and eventually list on the stock market in exchange for adopting higher corporate governance standards, including the protection of minority rights.

The proposal also entails an overhaul of Mexico’s corporate governance rules for public companies, including a redefinition of the functions of corporate officers, stiffer penalties for violations and new rules for stock brokerages.

If passed, the new law would “contribute to a greater capitalization of Mexican companies and their growth, a less volatile economy, midsized companies’ access to the stock market, job creation and a democratization of capital,” said Finance Minister Francisco Gil Diaz at a press conference. He said he hopes Congress will approve the law before going into recess at the end of April.

Mexico suffers from a lack of liquidity and of publicly listed companies, considering the size of the economy, said Gil, noting that the Mexican stock market has only 150 listed companies – one-hundredth the size of South Korea’s equity market. He believes the list could be at 1,500.

Meanwhile, Latin America as a whole attracts only 1% of global risk capital. Mexico is the destination for one-tenth of that flow, versus 40% of all direct foreign investment to the region, he added.

Thus, the government has proposed creating a new class of companies, allowing midsized businesses to voluntarily list on the stock exchange and meet corporate governance standards during a three-year process. Institutional investors would be allowed to invest in such firms.

In addition, the government wants to better delineate the loosely defined roles of company officials.

Gil indicated the changes will prevent fraudulent operations as well as deter abuses and practices by which companies can be “milked,” adversely affecting minority holders.

The new law would also boost the powers of the National Banking and Securities Commission, extending the statute of limitations for imposing sanctions to five years and giving public notice of investigations.

Jonathan Davis, president of the commission, said a list would soon be published on the commission’s Web site of violators of securities laws. The governing board would be deciding the criteria for which violations are “relevant for the market to know,” said Davis, and the list should be posted no later than May.

Unlike the existing law, which only allows public notification of a violator once all appeals and other legal recourses have been exhausted, the government’s latest proposal should improve transparency by giving notice of investigations when they are launched, Davis added. He indicated that currently more than 80 companies are being investigated on irregular operations, among them TV Azteca, an investigation that should be disclosing details by May or June.

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Bank of Nova Scotia is taking a closer look at Latin America. Richard Waugh, the chief of Canada’s third-largest financial institution, says without being specific that acquiring insurance companies in Mexico and Central America is a possibility. He also hinted at buying Banorte, Mexico’s only large commercial bank left in local hands. Canada’s banking industry is nearing market saturation, while Mexico and Central America remain extremely “underbanked”.

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Banco Azteca plans to invest $35 million this year to open 18 branches in Panama, the company said Friday in a release. The unit of retail and financial services company Grupo Elektra SA opened its first branch in Panama Friday, expanding outside of Mexico for the first time.

Elektra launched Banco Azteca two years ago in Mexico, setting up branches at its Elektra stores. By the end of last year, the bank was located in 873 Elektra stores, as well as at 412 other retail outlets, and operated 16 independent branches.

Elektra sells home goods and appliances, electronic goods and furniture, among other items, in approximately 1,000 stores in Mexico, Guatemala, Honduras and Peru.

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Finnish telecommunications equipment maker Nokia Corp. Wednesday unveiled its plans to extend its mobile phone production in Reynosa in Mexico.

The company said the US$20 million expansion will provide more capacity and flexibility in meeting Latin and North American customer needs. Nokia has invested US$130 million in Mexico since Year 2000.

The extended production facilities will be located near Nokia’s existing facility. Nokia anticipates the factory will begin production in the fourth quarter of 2005. Nokia currently has nine mobile phone factories globally.

The current Mexican facility holds eight production lines for manufacturing of TDMA, 4GCM and CDMA technology phones.

Reynosa is a strategic location for Nokia’s Latin and North American mobile phone supply chain. Nokia said that growing mobile penetration in Latin America is expected to be a major contributor to the global mobile subscriber base.

In addition to the Reynosa factory, Nokia has its mobile device and networks sales teams based in Mexico City.

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Transpro Inc. will move all of its aluminum heater production to Nuevo Laredo, Mexico, from Buffalo, New York, resulting in one-time charges of US$900,000 to US$1.2 million.

In a press release Friday, the manufacturer of aftermarket heat transfer and temperature control products said that once fully implemented, it anticipates closing the Buffalo plant will generate annual operating cost savings “substantially in excess of the one-time restructuring charges.”

The company, which expects the closing and relocation to be completed by the end of the third quarter, noted that it already has a leadership team in place at the Nuevo Laredo plant.

Transpro said the expansion of its aluminum heat exchanger manufacturing capabilities in Mexico will enable it to shorten its heater supply chain.

The charges will cover costs related to the relocation of inventory and equipment, the write-down of unutilized fixed assets and personnel-related expenses.

In the fourth quarter, the company earned $2.36 million, or 31 cents a share.

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As of 2006, Mexico could be assembling small passenger aircraft, an activity that has not been undertaken since 1935, which would strengthen the country’s emerging aeronautical industry, according to the Trade Ministry.

“It is very important to once again develop Mexico’s own (aeronautical) industry, which has high aggregated value, and could produce exports” said Javier Roch, Aviation Director of the Head Office of Civil Aeronautics (DGAC).

In the 1970’s and 1980’s, Mexico produced fumigating aircraft, but market conditions of that time led to the shutdown of production.

Roch commented that at least four companies – whose names he is not authorized to divulge – have expressed an interest in assembling aircraft, and have approached the DGAC. The Trade Ministry foresees that 15 to 20 investment projects in aeronautical manufacturing and engineering could be launched in 2005.

Firm s such as Boeing, Gulfstream, Honeywell, General Electric, United Technologies and Textron (Cessna and Bell Helicopter), among others, are working with the government and some universities in Mexico in order to develop the technical capacities that will allow them to manufacture or design for the aeronautical sector.

Around 60 firms, which generate 10,000 direct jobs in 11 states around the country already participate in the sector, producing airplane turbine components, fuselage parts, landing gear components, electronic cable harnesses and interiors.

In recent years, most of the U.S. aerospace companies have opened plants in Mexico or have found significant numbers of suppliers, with investments that have been proven to be profitable.

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The Japanese tire company, Yokohama, has officially started its operations in Mexico with the launching of its first retail store, the first of three that it will open in 2005.

Agustin Fernandez, General Manager of the tire company in Mexico said that the goal of the company is to have10% of the high-performance tire market share in the country. Currently, the national tire market is close to 14 million tires yearly and 3% represent the high-performance type.

Investment in each retail store is expected to be between US$300,000 and US$400,000, and it is foreseen that the shareholders of the Japanese tire company will decide whether to install a production plant in Mexico by 2008 or 2009.

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Bally Total Fitness Holding Corp. said it is opening more gyms in China and Mexico through franchised agreements as it expands outside the U.S. Chicago-based Bally, the nation’s largest gym operator, said it will open four more fitness centers in China, adding to its 12 existing locations. In Mexico, it will open its second facility in Monterrey.

The expansion in China will make it the largest gym chain in the country, Bally said. China “is very much underserved,” said Chief Executive Paul Toback. “They are really just getting started in fitness.” Bally has about 440 gyms with about 4 million members, mostly in the U.S. Toback said “down the line,” China can easily accommodate as many Bally clubs as there are in the U.S., which has 425 Bally-owned or franchised gyms, he said.

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G lass maker Vitro SA said Thursday that it placed 550 million pesos in debt backed by receivables at Vena, the holding company for its glass containers business.

In a press release, Vitro said the notes, issued through a trust, will be listed on the Mexican Stock Exchange and will pay interest of 120 basis points above the interbank rate TIIE. The TIIE rate was 9.95% Thursday.

The trust also issued subordinated notes for US$19 million in the U.S., Vitro said.

Payment of interest and principal of both issues will come from receivables at three Vena units. Proceeds will be used to finance working capital, Vitro added.

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Mexican conglomerate Alfa SA said Tuesday it plans to delay the completion of the spin-off of its steel unit, Hylsamex SA, which had been planned for the first quarter of this year.

In a press release, Monterrey-based Alfa said its chairman and chief executive Dionisio Garza Medina told shareholders at an assembly that the recovery in the world steel industry in 2004 has led several steel companies to approach Alfa with the idea of buying Hylsamex or merging it into their own operations.

“Therefore, time is needed to finalize the analysis of all the options Alfa has and determine which is the one that creates most value for Alfa shareholders as well as Hylsamex shareholders,” the company said.

Alfa, which spun off 39% of its 90% stake in Hylsamex over a year ago, had planned to complete the spin-off in the first quarter of this year. The company said the extension, to be submitted to a special shareholders meeting, won’t go beyond December of this year.

After several lean years in which it underwent a major debt restructuring, Hylsamex recovered last year and reported record earnings before interest, taxes, depreciation and amortization, or EBITDA, of US$759 million.

“In recent months, several steel companies have approached us, seeking to establish a serious dialogue about business opportunities that might arise through a consolidation of Hylsamex into their own operations or by buying Hylsamex shares, including those belonging to Alfa,” the company quoted Garza Medina as saying.

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Mexican conglomerate Alfa SA said it will rename its synthetic fibers business now that it has bought out the stake of joint-venture partner Teijin Ltd. of Japan.

In a press release, Alfa confirmed that its petrochemicals unit Alpek bought Teijin’s 75% stake in the Akra Teijin, and will rename it Akra Polyester.

The joint venture, formed in 1999, produces polyester filament and other synthetic fibers.

“Although the polyester filament business has experienced difficult market conditions globally in recent years, we believe there still are good opportunities to create value with it,” Alfa quoted Alpek’s president, Jose de Jesus Valdez, as saying.

The fibers concern has a capacity to produce 180,000 metric tons a year of fibers, and had sales of about $238 million last year.

Earlier Thursday in Tokyo, Teijin said it would take an extraordinary charge of ¥12 billion for the year ending March 31 as a result of its withdrawal from the joint venture. Financial terms of the sale weren’t disclosed.

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Mexicans on the Cydsa Board of Directors will seek to maintain control of the firm that recently ceded 60% of its shares to its foreign creditors. Tomas Gonzalez Sada, President of the Board of Directors of the Group, emphasized that his permanence at the head of Cydsa will depend on its operating results. He clarified that even though the foreign partners have 60% of its shares, they only hold 10% of the voting rights.

When the annual assembly ended, Gonzalez Sada stated that the strategy to be followed in 2005 consists in the sale of more nonstrategic businesses and some nonproductive real estate, applying savings programs in the use of gas with the change to alternative fuels, and to continue with its plan to make advance payments on its debts.

At the start of this year, Cydsa paid US$7.6 million as an advance payment on its debt with commercial banks, made up of US$7.2 million on the principal and US$0.4 million on interest. In addition, it made another advanced payment on its stock obligations worth US$14.6 million, consisting of US$14 million to the principal and US$0.6 million on interest.

At the end of 2004, Cydsa reported a net loss of P$1096 million, which was 34% more than what they registered in 2003 at P$821 million. The firm indicated that most of the net loss in 2004 was due to extraordinary and not recurrent items.

The operating profit came to P$122 million in 2004, which compared favorably with the operating loss of P$70 million for 2003. Total Sales for 2004 reached P$7.122 billion, which represented a 16.5% increase in real terms compared to the year before.

Alberto Santos, stockholder and President of the Board of Directors Audit Committee indicated that the debt reduction along with its restructuring has allowed the group to overcome its problems, and thus there is no risk of loosing managerial control.

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Cemex SA said Thursday it has completed the sale of select assets in the U.S. Great Lakes region to Brazil’s Votorantim Participacoes SA (VCP) for $389.5 million.

In a press statement, Cemex said the Charlevoix and Dixon-Marquette cement plants it sold have total production capacity of 2 million metric tons each per year. The plants represented about 9% of Cemex’s operating cash flow in the U.S. prior to the company’s $5.8-billion acquisition of the U.K.’s RMC Group PLC, which was completed earlier this month.

The Mexican cement giant, the world’s third largest, said it also sold select distribution terminals in the region to Votorantim. The company opted to keep its Detroit terminal. Cemex has previously said that it will use the proceeds of the Great Lakes assets sale to reduce debt.

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Kimberly Clark has hired Citigroup to be in charge of the sale process of its subsidiary, Productos Industriales (Prodin), which is dedicated to the production of the famous Scribe notebooks, writing and printing paper, paper for cigarettes and the operation of its wood processing plants.

Banamex estimates that the sale of this business unit could represent up to US$500 million for the firm headed by Claudio X. Gonzalez.
Jorge Lara, Financial Director of Kimberly Clark explained that one of the main reasons for the sale of Prodin, a business that contributes 20% of the firm’s sales, is to strengthen the structure of its Consumer Products Division (Procum for its initials in Spanish), the most important one for Kimberly Clark that includes napkins, toilet paper, and disposable handkerchiefs, among others.

Scribe has a market share of close to 80%, and it represents 25% of Prodin’s sales. Its production volume surpasses 200 million notebooks a year, according to Lara. He specified that the consumer products business could achieve better margins, being that it is more flexible, and factors such as innovation, marketing and distribution are intertwined.

Last November, the Kimberly Clark Corporation, owner of 48% of Kimberly Clark Mexico, split its paper business in the U.S. in order to form Neenah Paper, by which the Mexican firm was the only one within the business with no advantages, no synergies, and no scale of economy. This situation motivated the company to hasten the sale of Prodin.

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When it displaced Holland in 2003 in beer sales to the world market by volume, Mexico became the leading exporting force for this distilled product, according to figures by the UN’s Food and Agricultural Organization (FAO).

In 2003, Mexico exported 1.39 million metric tons of barley distillate against the 1.30 million metric tons that Holland sold to the world. Although the FAO has not published information yet on beer exports in 2004, the latest reports of the Mexican beer companies and the U.S. Beer Institute indicate that the Mexican lead will continue.

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Mexican automakers turned out fewer vehicles last month than in March 2004 as exports also fell sharply, according to data released Thursday by industry association AMIA.

In a press release, AMIA said manufacturers produced 115,654 vehicles, or 15.2% less than in March of last year, and that exports slid 23.3% to 81,043 units. Sales to Mexican consumers slipped a more modest 5.2% to 89,483 vehicles.

The industry group attributed the sales drop to the Easter holidays, which fell in April last year. Mexico essentially shuts down for an entire week during the Easter holidays.

Mexican auto production has suffered in recent years amid a slump in demand from consumers in the U.S., where close to 70% of Mexican-made cars are sold.

Major auto makers with factories in the country include Volkswagen AG and General Motors Corp. Domestic production should pick up again in the second half of the year, AMIA said, as projects planned by several automakers ramp up.

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Jose Luis Rodríguez Salazar, General Secretary of the Independent Volkswagen de Mexico Workers Union, confirmed that the company hired 1500 employees during the first quarter of the year. One thousand one hundred of the employees are temporary, while 400 have been added to the permanent workforce. The additions have been made in order to sustain production of VW’s Bora model.

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Mexican home builder Corporacion Geo SA said Friday it expects to report net profit growth of 54% or higher on the year for the first quarter. In a filing with the Mexican Stock Exchange, Geo said that preliminary results show it sold more than 7,000 homes during the three-month period, with sales topping 1.82 billion pesos ($1=MXN11.1425).

“Thanks to adequate company planning, Geo’s solid results this quarter will assure that its profitable and sustainable growth rate continues,” Miguel Gomez Mont, the company’s executive vice president, said in the statement.

The company plans to report final results for the quarter after the stock market close on April 25.

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Wal-Mart de Mexico SA, the country’s largest mass merchandiser, said Thursday that same-store sales grew 9.5% in March over the same month last year. Same-store sales figures include stores in operation for at least one year. Total sales were 12.12 billion pesos ($1=MXN11.1893), up 17.1% from a year ago, the company said in a filing to the Mexican Stock Exchange.

Wal-Mart de Mexico, controlled by U.S.-based Wal-Mart Stores Inc., operates close to 700 commercial outlets and restaurants, including Bodega Aurrera, Sam’s Club and Wal-Mart Supercenter hypermarkets; the upscale supermarket chain Superama; Suburbia clothing stores and Vips restaurants.

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Railroad company Kansas City Southern Industries Inc. said Tuesday its shareholders have approved its acquisition of Mexican rail line Transportacion Ferroviaria Mexicana, or TFM. Kansas City Southern, which will pay transportation company Grupo TMM $660 million in cash and stock for its 51 percent share in the railroad, said it will complete the purchase and take over TFM on April 1. The vote ends a long series of legal and financial wranglings for TFM, the largest railroad company in Mexico, which Kansas City Southern plans to fold into its existing system under the new name Nafta Rail.

Shareholders on Tuesday approved issuing 18 million shares of common stock in conjunction with the acquisition, in addition to other shares in certain circumstances.

“TFM will be operated as an independent Mexican entity under the control of KCS, a consortium which also controls The Kansas City Southern Railway Company (KCSR), The Texas Mexican Railway Company (Tex Mex) and The Gateway Eastern Railway Company,” according to a corporate statement.

The Mexican authorities regulating foreign investment had approved the operation in October 2004.

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Mexican transportation company Grupo TMM SA (TMM) said Friday it completed the sale of its railway unit to partner Kansas City Southern (KSU), or KCS, for about $600 million.

TMM said the sale price of Transportacion Ferroviaria Mexicana, or TFM, includes $200 million in cash, $47 million in 5% promissory notes due June 2007, and 18 million common shares of KCS currently valued at $355 million.

KCS would pay an additional $110 million in cash and shares, assuming a favorable resolution of the company’s tax dispute with the Mexican government, TMM said.

In a separate statement Friday, KCS said it now owns all of TFM, and described the transaction as a “historic opportunity to create one of North America’s premier railroads.”

KCS plans to join its U.S. railway, the Texas-Mexican railway it bought from TMM last year, under common leadership.

Nevertheless, TFM will remain a Mexican corporation with Mexican leadership, KCS said, adding that it named Vicente Corta as interim chief executive of TFM. Corta is a former Finance Ministry official and also headed the country’s bank savings protection agency and the pension fund management regulatory agency.

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Grupo Transportacion Ferroviaria Mexicana SA de CV, a Mexican railroad operator, plans to sell $460 million of high-yield, high-risk notes next week, said a person familiar with the offering who declined to be identified.

The securities will mature in seven years and ten years, and TFM will use the proceeds to pay debt, the person said. Morgan Stanley will manage the transaction, which is expected to price in the second half of next week.

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Canadian transport conglomerate Bombardier Inc. said Friday it has secured seven new orders for corporate jets in Latin America in the past six weeks, worth $132 million. The sales include two jets to Brazil, four to Mexico and one to Honduras.

Fabio Rebello, Bombardier’s regional vice president for Latin America, said at a press conference that the company is expecting the healthy growth of recent years to continue in the region, including in Brazil, where Bombardier faces tough competition from Brazilian concern Embraer.

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Mexico ’s 16 ports are due to receive about 7.36 billion pesos ($1=MXN11.2010) in investment this year, the Transport and Communications Ministry said Tuesday. In a statement, the Ministry’s ports coordinator said that MXN5.29 billion of the funds will come from private sources. The Gulf Coast port of Altamira will receive the largest investment – MXN3.56 billion coming from private and public sources.

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Mexico ’s Transport and Communications Ministry said Tuesday it has chosen a firm to consult on plans for a high-speed train that would connect the country’s two largest cities.

In a statement, the Ministry said it hired French transportation engineering company Systra to set the terms for bidding on the project for a high-speed train between Mexico City and Guadalajara. Without disclosing the fees it will pay Systra, the Ministry said it chose the company over eight other international bidders for the consulting job.

The Ministry said it expects to have the bidding terms for the overall project ready by midyear. The country’s Finance Ministry and public works bank Banobras are also sponsoring the project.

The train is expected to travel at 300 kilometers an hour, reducing the trip to Guadalajara from the capital to two hours versus about six hours by car. The train will also make stops in the cities of Queretaro and Irapuato.

Roughly 28 million people live in the areas of central Mexico that will be connected by the train.

Mexico is searching for alternative transportation as its highways and airports become increasingly clogged. Metropolitan Mexico City, home to about 20% of the country’s 105 million inhabitants, has one very busy airport, lots of traffic snarls and air pollution.

The government is also planning a suburban train line that would connect Mexico City’s old Buenavista terminal with a sprawling residential and industrial area, Cuautitlan, in the State of Mexico.

The Ministry hopes to have the suburban train network complete by October 2006, two months before a new president is due to take office. The railway is expected to transport 100 million people a year, reducing commuting times for some by two and a half hours.

Mexico City ’s principal urban transport means is the Metro, which carried an average of 3.6 million people a day on its 11 lines in 2004.

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The most important placement in this year’s panorama is the 85% that the government holds in the Pacific Airport Group (GAP). The expectation of the Transport and Communications Ministry (SCT) is that it would open another window of opportunity for the markets towards the end of May or beginning of June.

By placing GAP securities at a good price, the sale of this package could represent up to US$700 million. In contrast to ASUR, which has a good part of its EBITDA resting in Cancun, GAP experiences a lower concentration of its value.

Among its 12 airports are Guadalajara, which is its most important, with more than one-third of its revenues, followed by Tijuana and Hermosillo. Also relevant are Los Cabos and Puerto Vallarta. In total, PAG receives 18 million passengers yearly.

The Ministry anticipates presenting the initiative before the SEC by the end of the month.

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Verizon Communications Inc. said Saturday it is paying $1.1 billion to acquire a 13.4% stake in MCI Inc. directly from its largest single stockholder. The transaction removes a major wild card in Verizon’s bid to fend off a higher-priced offer to acquire MCI by Qwest Communications International Inc. of Denver. The New York telephone company is paying $25.72 per share in cash to Mexican billionaire Carlos Slim Helu, who had previously expressed dissatisfaction with the offers from both Verizon and Qwest.

The deal values Slim’s 43.4 million shares at an 11% premium to the $23.10 per share Verizon agreed to pay MCI’s other shareholders two weeks ago in a sweetened $7.5 billion deal.

Verizon and Qwest, two of the nation’s biggest telephone companies, have been battling for two months to win MCI and its national fiber-optic network and lucrative roster of government and corporate clients.

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A Spanish and a Mexican company are vying for supremacy from strong bases in Latin America’s fast-growing wireless service market.

Latin America has provided telecoms investors one of the fastest-growing mobile service markets in the world for several years. Consolidation, after BellSouth’s ( U.S.) exit from ten countries last year, has narrowed the competition to two big players: Spain’s Telefónica Móviles and Mexico’s América Móvil. Both count 40M-50M subscribers in the region and are vying to become the undisputed leader in a market in which Telecom Italia Mobile (TIM) still operates as well.

América Móvil just prevailed in bidding for a license auction on March 31 in Peru, thereby gaining entry to another Latin American market. The operator may square off against Telefónica for additional licenses in Mexico this year. Yet, controlled by Mexican telecoms and retailing mogul Carlos Slim, América Móvil is keen to take on Telefónica in the Spanish telecoms giant’s top market in the region, Brazil.

Telefónica’s position in Brazil – much of it acquired through the country’s massive telecoms privatization of 1999 – gives it an edge over América Móvil for the time being. Yet the Spanish telecoms giant faces a tough task in trying to increase its presence in Mexico. This market has long been dominated by América Móvil, which was spun off from Teléfonos de México (Telmex) and operates as Telcel in its home market.

Mr. Slim, well known for his business savvy, and his companies will spend close to US$2B to expand in Latin America. Last year he bought two cell-phone companies in Brazil and CTI Móvil in Argentina. He also increased his stakes in Colombia’s Celcaribe and Ecuador’s Conecel.

However, Telefónica has recently spent nearly US$6B to acquire all of BellSouth’s regional assets in the ten markets it vacated. The deals have allowed the Spanish operator to bolster its previously minimal presences in Venezuela, Colombia and Ecuador.

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Mexican wireless companies have finished bidding in an auction for the 1900 MHz frequency spectrum, but a legal battle between operators and antitrust regulators means allotments will take more time.

The Federal Telecommunications Commission, or Cofetel, auctioned four blocks of 10 MHz in each of the country’s nine wireless regions.

Bids totaled 190.9 million pesos ($1=MXN11.2010), of which America Movil SA unit Telcel submitted bids for MXN85.1 million, Spain’s Telefonica Moviles SA for MXN48.6 million, and Grupo Iusacell for MXN57.2 million.

Unefon SA decided not to take part, while Nextel de Mexico, a unit of NII Holdings, pulled out after securing spectrum at 800 MHz in a previous auction, which it said was adequate for its expansion plans in Mexico.

According to the list of highest bids, Telcel would acquire two blocks in Region 9, which includes Mexico City, with its 20 million inhabitants. Telefonica Moviles and Iusacell would each get one block in the region.

But before Cofetel can assign any of the blocks, disputes between operators and the country’s antitrust regulator, the Federal Competition Commission, or CFC, must be settled.

Telcel is the country’s biggest wireless operator and had 28.9 million subscribers at the end of 2004. Telefonica Moviles had 5.6 million subscribers, and Iusacell had 1.5 million.

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Voice over Internet Protocol Telephony in Mexico has become a market serviced by new competitors each day, and Constellation Capital does not intend to miss out on its slice of the pie, which is estimated at more than US$6 billion at a 20% penetration. This firm will seek to establish its presence in the Mexican telecommunications market through different avenues, which does not mean that it will abandon its persistent attempts to obtain participation in Satélites Mexicanos (Satmex). While it waits for Satmex and the federal government to reach an agreement, Constellation has negotiated with different public telecommunications network concessionaires to finalize alliances and to launch telephony services over the Internet.

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Getronics has begun its operation of three new technology centers in order to service the local and export markets requiring information development capabilities. One of the units will be in Monterrey, the second in Mexico City and the third in the State of Mexico, providing employment to 430 people, although the goal is to reach 650 at the end of this year. The first center will produce software for the global market; the second, financial software; and the third, technical support for users of business applications.

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Grupo MVS has just signed an agreement with Comcast Corporation to launch Channel 52 MX next June 8 for the U.S. Hispanic market. By this arrangement it will reach an audience of 2 million homes in cities such as Los Angeles, Chicago, Dallas, Sacramento, Fresno, Miami, New York and Washington, D.C. Comcast is a global leader in cable and broadband TV.

The agreement was signed by MVS Television and Comcast Cable, which reaches 17 of the 20 most important metropolitan areas of the U.S. Channel 52 MX will be, in turn, an enjoyment option with all kinds of programming, both its own as well as acquired: comedy series, action and drama, contests, sports, movies, news and opinion forums.

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Televisa is seeking to expand its presence in the delivery of content to cellular phones, a growing business that represents 70% of its media group. The PSMS (Premium Short Messaging System) services of its Esmas subsidiary are the most popular in the national market, which is currently valued at an estimated US$80 million annually. The first step in the strategy was to take services to the Hispanic community residing in the U.S. In the following weeks they will debut in Ecuador, Peru, Bolivia and Chile, so stated Juan Saldivar, director of Esmas.

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The days of Vogue en Español and Glamour en Español are numbered. Condé Nast International plans to stop publishing the two titles with their May issues, replacing them in the United States and Latin America with the magazines’ Mexican editions.

The Miami office that puts out the magazines will be reduced to a small advertising sales and editorial staff, while the bulk of the operation will move to Mexico City, said spokeswoman Maurie Perl.

The folding of the two magazines marks the last of the nine Spanish-language titles published under license agreements by the former Miami-based Ideas Publishing Group.

Industry watchers said the move appears to run counter to the trend, as several U.S. publishers are going gung ho with ventures for the U.S. Hispanic market. ESPN Deportes and Sports Illustrated recently announced plans to launch Spanish-language magazines, for instance, while American Media, publisher of the National Enquirer, has also invested heavily in Hispanic fitness and celebrity titles.

Perl said Condé Nast made the move in order to focus on the Mexican market. Additionally, about two-thirds of U.S. Hispanics are of Mexican origin, she noted.

‘‘It makes sense to concentrate on Mexico,’’ she said.

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A single case of low-pathogenic bird flu has been reported in the northern Mexican state of Durango by local sanitary control authorities, a source at the Mexican Agriculture Ministry said Wednesday.

“There was a single case of avian flu in Durango which has been taken care of. It was not reported to international authorities since it was of low-pathogenic level and as such is not required,” the source told Dow Jones Newswires.

He said the case was found at the local processing facilities of U.S. chicken producer and processor Tyson Foods (TSN). The facilities are close to the city of Torreon in the area of Durango, which borders Coahuila State.

The case was found after an estimated 2 million chickens were culled earlier this week. Suspicion initially had arisen in early March that avian flu had reached Mexico despite vigorous controls at all border entries.

Unlike cases in Southeast Asia, the low-path strain of bird flu doesn’t adversely affect humans, but can devastate flocks, according to industry officials.

It was not immediately clear how the bird flu case had reached Mexico, which recently eased an embargo on poultry products from the U.S. and partially lifted a ban initiated after an outbreak of bird flu in neighboring Texas.

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The U.S. Department of Agriculture acknowledged Campeche, Quintana Roo, Yucatán and Sonora to be free of classic hog fever, which will allow for the export of live hogs, meat, sperm and carnic products from these entities beginning on March 12. A spokesman from the national pig growers association (Consejo Mexicano de Porcicultores) welcomed the sanitary decision, since approval gained from the U.S. automatically gains recognition from other countries and thus will allow Mexico to access other markets.

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The Chamber of Deputies Tourism Commission ruled yesterday in favor of the Gamming Law initiative ( Ley Federal de Juegos con Apuestas y Sorteos) currently under consideration in the Legislature’s lower house. The initiative contains regulations for the establishment and operation of casinos. The ruling is subject to further detailed approvals within the Commission, which are scheduled for April 14.

Once the initiative is passed by the Tourism Commission, it will be submitted to the Government and Finance Commissions before being presented to the Chamber’s floor.

In an interview, Francisco Javier Bravo (President of the Tourism Infrastructure Sub-Commission) indicated that one of the main changes approved increases the special gaming tax from the originally proposed 9% to 12% on gross income.

The breakdown of the percentages awarded to federal, state and municipal governments stemming from this special tax will be awarded 30% federal, 30% state and 40% to local (municipality or county) authority. Provisions are being made in order to earmark percentages to local programs dealing with security/safety and gaming addiction and related problems (about 4% total).

Additionally, the ruling approved yesterday reduces the period required for casino installations from five to four years, once the law is approved.

Still pending review is a disposition indicating that licensees must be societies formed under Mexican law with at least 50% Mexican capital.

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Mexican consumer prices probably rose at their fastest pace in four months in March as higher international oil prices pushed up the cost of natural gas, jet fuel and electricity.

Consumer prices rose 0.42 percent in March from the previous month, up from 0.33 percent in February, according to the median estimate from 15 economists surveyed by Bloomberg.

The 12-month rate climbed to 4.35 percent from 4.27 percent in February, the survey showed. The Central Bank is scheduled to release March inflation data today at 3:30 p.m. New York time.

Faster inflation may lead Central Bank Governor Guillermo Ortiz this month to raise interest rates for the 13 time since February 2004. Ortiz, 56, said as recently as January 31 that he expected the inflation rate to remain “high” for several months before declining toward the Central Bank’s 2 percent to 4 percent target range by year-end. Inflation was 5.19 percent in 2004.

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The Minuteman Project, set to begin tomorrow in Tombstone, Ariz., had no trouble finding volunteers. About 1,300 people are expected to show up for some part of the monthlong protest, say the organizers, who hope to place the people at half-mile intervals to monitor a 23-mile stretch of border said to be the most porous in the nation.

But the project’s unexpected popularity is raising serious safety concerns among federal and local officials and watchdog groups fearing it will attract extremists or spark violent confrontations. Postings about the event have been spotted on white-supremacist Web sites, and flyers from hate groups have been found in mailboxes in recent days.

“They are going to draw every misfit, every renegade, everyone with an ax to grind about ethnic preference,” said Ray Borane, mayor of Douglas, Ariz., a border town that will be ground zero for much of the month. “They are not welcome here.”

Across the border, Mexican President Vicente Fox has condemned the program, calling it an “immigrant hunter.” President Bush echoed those concerns last week.

Simcox, 44, of Tombstone said he has been screening out volunteers with any criminal record and will hold participants to a “strict no-contact policy” – if they see anyone trying to cross the border, they are to call the U.S. Border Patrol, he said. He and fellow organizer Jim Gilchrist of Aliso Viejo, Calif., have also toned down some of the rhetoric, now advertising the event as less of a civilian patrol than a “political rally and protest” meant to draw national attention to their cause. They say it is working: yesterday the Department of Homeland Security announced it will assign 500 more patrol agents to the Arizona border, a 25 percent increase, some of them immediately. Border Patrol officials, though, say the announcement has no connection to the Minuteman Project and simply comes in line with recommendations from intelligence officials.

Human-rights and civil-liberties organizations, meanwhile, are condemning the effort but said they are also stepping carefully for fear of adding to a circuslike environment on the border.

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The Senate is bracing for its first fight over amnesty for illegal immigrants in nearly ten years after the chamber’s parliamentarian ruled that a debate over granting legal status to illegal agriculture workers will be allowed on the pending emergency spending bill.

The $81 billion spending bill covers costs associated with the war on terror, and the House already passed a version with provisions restricting asylum claims and cracking down on illegal immigrants’ ability to use driver’s licenses. The parliamentarian said those provisions open the door for Sen. Larry E. Craig, Idaho Republican, to offer as an amendment his bill, commonly called “Ag-jobs,” to legalize the 500,000 to 1,000,000 illegal immigrants now working in the agriculture industry.

“With the parliamentarian’s approval it’s looking more and more likely we’ll offer Ag-jobs as an amendment,” Craig spokesman Sidney Smith said. “That decision isn’t set in concrete, but it’s starting to shape up that way.”

The spending bill will be before the Senate Appropriations Committee on Wednesday.

The measure would allow any agriculture worker who is in the United States illegally and who has worked 100 days out of a year, during the 18 months prior to January 1, 2005, to gain legal status.

Congressional aides and lobbying sources said the Bush Administration would prefer to see a comprehensive bill pass rather than Mr. Craig’s bill, and Mr. Cornyn has begun a series of hearings aimed at producing such a broad bill later this year – something Senate Majority Leader Bill Frist, Tennessee Republican, also would have preferred.

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Virginia Governor Mark Warner yesterday signed into law a measure that denies illegal aliens public benefits, including access to Medicaid, welfare and local healthcare services.

“I have signed this legislation into law but will ask the Latino Advisory Commission to study and monitor the legislation to ensure that it is fairly implemented and does not impose undue costs on local governments,” said Mr. Warner, a Democrat who is in his last year in office.

There is no official local or state estimate of how many taxpayer dollars would be saved, since the agencies do not track how many illegals currently receive such benefits.

Virginia spends about $2 billion on Medicaid and an estimated $60.5 million on the Temporary Assistance for Needy Families Program annually.

Lawmakers and immigration experts have said there are an estimated 200,000 illegal aliens in Virginia, which has an estimated population of 7.4 million.

The law, which takes effect January 1, requires state and local governments to verify the legal presence of those seeking nonemergency public benefits. It applies only to aliens 19 and older. Illegals of any age still will be eligible for emergency aid, such as immunizations and pregnancy tests.

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Stockton , CA , Apr. 5 (UPI) – Illegal aliens contribute $7 billion a year to U.S. Social Security coffers, and, given their immigration status, are unlikely to ever collect benefits.

With debates in Congress over immigration and Social Security, the cross between the two issues has taken an interesting turn. There are an estimated 7 million illegal immigrants in the United States and they pay some $7 billion a year into the Social Security system, The New York Times reported, while indicating that many immigrants contribute more than most Americans to the solvency of the nation’s public retirement system.

The newspaper said the Social Security Administration, beginning in the 1980s, noticed a large number of W-2 reports with incorrect or faked Social Security numbers. Over the 1990s some $189 billion worth of wages were recorded by the SSA, the Times said.

The time frame coincides with the 1986 Immigration Reform and Control Act, which set penalties for people who knowingly hire illegal aliens. A brisk business in fake identification and SSNs quickly grew, provided legal cover for the employers and, so far, a windfall for the SSA.

An SSA official told the Times the administration estimated 75% of illegal immigrants – estimated by the Census Bureau at 3.8 million households – pay payroll taxes. Those immigrants are not eligible to receive Social Security benefits.

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According to the Banco de Mexico, foreign currency entering the country by means of remittances sent by workers abroad amounted to 2.532 billion dollars during the first bimonthly period, which represents an increase of 25.17% in terms of the amount registered for the same period last year. Experiencing constant growth, income from remittances is equivalent to 72% of resources obtained due to oil exports, which amounted to 3.572 billion dollars over the same period.

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Travelers headed into the United States from Canada, Mexico or Bermuda will have to show a passport under new rules that will be phased in by January 2008 as part of an effort to increase security at the nation’s borders, officials said Tuesday.

The lack of a requirement that United States citizens, or Mexicans and Canadians in many cases, display passports at land borders, airports or seaports since September 11 has been considered a major flaw in the effort to secure the borders.

United States citizens can now reenter the country from Canada and often from Mexico, the Caribbean, Bermuda and Panama by showing a driver’s license. Similarly, certain foreigners are not required to present passports to travel to the United States from these countries.

The intelligence reform act that passed in December required that the Department of Homeland Security require United States citizens and foreign nationals to present a passport or another appropriate security identity card or citizenship document when entering the United States.

Given that the new requirements could force major delays at borders – and problems for both American citizens and visitors – the government is phasing the new requirements in over the next three years.

The rule’s first phase will go into effect December 31, 2005, requiring all U.S. citizens traveling by air or sea to or from the Caribbean, as well as Central and South America, to have passports. The next phase, which will apply these rules to all air and sea travel to or from Mexico and Canada, will begin a year later.

The last phase, which will affect the most people by far, will take effect on December 31, 2007, and will apply the requirement to all air, sea and land border crossings with Mexico and Canada.

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Congress voted Thursday to strip Mexico City Mayor Andres Manuel Lopez Obrador of his immunity from prosecution, an extraordinary move that could lead to his arrest for disobeying a court order and prevent him from running in next year’s presidential election.

The action against Lopez Obrador has created worries here and abroad about the progress of Mexico’s transition toward democracy after more than seven decades of authoritarian rule, which ended in 2000. It has also raised questions about whether millions of Mexicans would accept the validity of the 2006 presidential election without the popular front-runner on the ballot.

The federal attorney general’s office said the mayor “abused his authority” by failing to comply with a judge’s order to halt construction of an access road to a hospital. With his immunity now lifted, the attorney general’s office has said that Lopez Obrador would be charged in the coming days with violating a 2001 court order in the land dispute, and that it would seek his arrest. Mexican law states that anyone facing formal criminal charges is prohibited from running for elective office. Lopez Obrador said Thursday that he broke no law and that he was being railroaded by political enemies trying to keep him out of the presidential race.

President Vicente Fox has said the case shows that the rule of law is working in Mexico and that anyone who breaks the law, no matter how popular or powerful, will be prosecuted. Fox, who was traveling Thursday to Rome to attend the funeral of Pope John Paul II, had no immediate comment about the vote in Congress.

Interior Minister Santiago Creel, the leading presidential candidate from Fox’s National Action Party, acknowledged Thursday night that there had been many critics of the process but said it was worth the effort. “ Mexico is at peace,” he said. “It is a country of institutions and laws.”

Hours before the vote, Lopez Obrador addressed a huge throng of supporters in the Zocalo, the main square in Mexico City, telling them that the action against him “returns us to the authoritarian era” when political leaders, not the people, “decided who could or could not be the president of Mexico.”

The call to avoid violence by Lopez Obrador, who used the occasion to formally announce he would seek the nomination of the leftist Party of the Democratic Revolution even if he is jailed, calmed financial markets that had slumped in previous sessions. Mexican stock prices rose 2.5% on the day after falling more than 3% so far this week.

Lopez Obrador is a populist leader who has built a strong base among the city’s poor, largely through spending on social services and public works. His critics, especially business leaders, argue that his lavish spending has won him votes at the expense of the long-term economic health of North America’s largest city. He has also caused concern by saying that the economic model Mexico has been following is not working and that an “alternative” is needed to bridge the gap between rich and poor.

“I am not being judged for breaking the law; I am being judged for my way of thinking and acting,” he said, speaking Thursday before Congress. He accused Fox of having an “obsession” with him and “degrading the institutions of the republic” to “campaign against me.” He also accused Supreme Court Chief Justice Mariano Azuela of “subordinating the high principles of justice” to “political orders.”

After a nine-hour session, the lower house of Congress voted 360 to 127 to strip the mayor of the immunity from prosecution afforded to Mexican elected officials. The votes against him came largely from the Institutional Revolutionary Party, or PRI, and Fox’s National Action Party, or PAN, the two largest blocs in the 500-member chamber.

Lopez Obrador has accused Fox of hypocrisy, saying he came into office in 2000 promising to end the ruling party’s decades-long use of the courts and Congress as blunt instruments against the government’s enemies. He said the PRI and the PAN are now doing exactly the same in their zeal to eliminate the major obstacle to their parties’ presidential hopes next year. His supporters also argue that even if Lopez Obrador technically broke the law, his infraction was minor compared with major crimes and corruption that routinely go unpunished in Mexico.

Lopez Obrador’s opponents argue that he is trying to turn himself into a political martyr.

“For us, the rule of law is the key issue,” said Jose Luis Barraza, president of the Business Coordinating Council, which represents many of the largest companies in Mexico. He said Lopez Obrador has a record of ignoring the law, which worries his organization.

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Attorney General Al Gonzales headed to Mexico City for a day of meetings today with President Vicente Fox and other top officials.

Mr. Gonzales, who was sworn in as attorney general last month, will discuss cross-border cooperation during his 24-hour visit, said Justice Department spokesman Kevin Madden.

He will meet with Mr. Fox and Foreign Minister Luis Ernesto Derbez at Los Pinos, the presidential residence, Mr. Madden said. Mr. Gonzales also will have separate meetings with Interior Minister Santiago Creel, Attorney General Rafael Macedo de la Concha and Eduardo Medina Mora, head of the government’s intelligence service.

The visit by Mr. Gonzales, a close adviser to President Bush and the nation’s first Hispanic attorney general, comes at a time of tension in the U.S.-Mexican relationship. U.S. officials have been worried about a spate of violence along the border and kidnappings of U.S. citizens, leading to a State Department travel alert that angered Mexican authorities.

Mexican sensitivities also have been inflamed by a vote in the U.S. House of Representative to complete a section of border fencing along a heavily trafficked area in California.

On the U.S. side, homeland security officials are concerned that terrorists could infiltrate through the porous southern border. And issues of drug smuggling, human trafficking and illegal immigration remain a constant in the U.S.-Mexican relationship.

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El Paso – In a newly released letter, a senior U.S. law enforcement official blasts a branch of the U.S. Department of Homeland Security for its handling of a paid informant involved in a series of drug-related killings on the U.S.-Mexico border.

The letter, written by Sandalio González, a 32-year law enforcement veteran who was then special agent in charge of the U.S. Drug Enforcement Administration’s El Paso office, accuses agents of the U.S. Immigration and Customs Enforcement, or ICE, and a U.S. prosecutor of obstructing justice and endangering the lives of American agents.

The letter, dated Feb. 24, 2004, corroborates information about the case first reported in The Dallas Morning News more than a year ago. The newspaper reported that a man identified as Lalo had participated in a series of killings for a Mexican drug cartel while working as a paid informant for ICE, part of the Department of Homeland Security.

Mr. González’s letter accuses ICE of “a total disregard for human life and disrespect for the rule of law in Mexico.” It alleges that ICE obstructed a murder investigation in Mexico and placed DEA agents and their families at risk by withholding information and by allowing the operation involving the informant to continue.

“This situation is so bizarre that even as I’m writing to you it is difficult for me to believe it,” Mr. González wrote in a 2,194-word memorandum addressed to John (Giovanni) Gaudioso, then special agent in charge of ICE in El Paso. “I have never before come across such callous behavior by fellow law enforcement officers.”

Mr. Gaudioso and another ICE supervisor were transferred to Washington last year and could not be reached for comment. Calls to the Department of Homeland Security in Washington were not returned, and ICE officials in El Paso and the U.S. attorney’s regional office in San Antonio declined to comment.

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A Nuevo Laredo radio reporter remained in serious but stable condition Thursday after she was shot at close range by an unidentified assailant.

Dolores Guadalupe “Lupita” Garcia Escamilla, 39, a police reporter for the popular radio station Stereo 91, was hit nine times at 7:48 a.m. Tuesday at the station. Minutes earlier, Ms. Garcia had aired a live report about an attorney who was shot to death Monday. The lawyer, Fernando Partida Castaneda, had represented drug traffickers. He was apparently the latest victim in a drug war that has claimed the lives of 300 people in Mexico this year as rival cartels fight for control of the lucrative drug route leading to the Interstate 35 corridor.

As of Wednesday, 32 people had been killed in Nuevo Laredo this year and 59 in the state of Tamaulipas, which borders Texas. In 2004, four journalists were slain in Mexico because of their coverage of drug traffickers, according to the Center for Journalism and Public Ethics, a watchdog group in San Miguel de Allende.

Three of those journalists were from the border, including Roberto Mora, editor of Nuevo Laredo’s daily newspaper, El Mañana. One journalist is listed as having disappeared, and dozens more have been picked up by drug traffickers and released only after agreeing not to investigate the traffickers’ illicit activities.

Media watchdogs, including the Center, say that only Iraq, Bangladesh and the Philippines had more journalists killed last year than Mexico.

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The U.S. State Department warned tourists of increased dangers in Cancun, Mexico, the top foreign destination for U.S. travelers, saying a strike by local police has left visitors vulnerable to a variety of street crimes.

“Police responsiveness to emergency calls and investigation of crimes has been severely impaired, and the U.S. consulate in Merida has received several reports of petty corruption and extortion aimed at U.S. travelers,” the State Department said. The warning could be damaging to the tourist industry in Cancun, which the American Society of Travel Agents ranks as the top international destination for travel by U.S. families.

The Dallas Morning News reported last month that about three- fourths of the 1,200 local police officers have been on strike over pay in Cancun. The State Department said today it “has received numerous allegations of tourists being extorted for money by taxi drivers and malfeasant police or individuals posing as police officers” in Cancun.

“In some cases, tourists have been taken to ATM machines for immediate payment of alleged infractions,” it said.

The American Society of Travel Agents in December listed Cancun at the top of a list of international destinations of U.S. families, accounting for 21 percent of all bookings.

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The campaign for president of Mexico has taken on the air of the bad old days, when the dictatorial PRI, the Institutional Revolutionary Party, loaded elections for its candidates. The top contender, Mayor Andres Manuel Lopez Obrador of Mexico City, is expected to be barred from the 2006 race by a transparently political indictment on charges of ordering the construction of a service road to a hospital after a judge said no. We don’t endorse his actions, but Mexico’s voters should be allowed to make their choice, not have it made for them.

Last week, a congressional panel voted along party lines to strip Mr. Lopez of his immunity as an elected official. Congress’s lower house is expected to take up the issue today and to confirm the decision. Then he’ll probably be indicted – and by law, no one facing a criminal trial can run for president.

Mr. Lopez has taken full advantage of the situation, which has distracted attention from serious charges of corruption against his top aides. He has compared himself to the Rev. Dr. Martin Luther King Jr. and vowed to campaign from jail. Certainly, he is no Martin Luther King. A longtime PRI official who moved to the leftist Democratic Revolutionary Party, he has built a machine in Mexico City modeled on the PRI nationwide. He is increasingly a demagogue, and he has fought reforms, like making information available to the public. He responded to a huge march against a crime wave by calling it an attempt by dark forces to attack him.

But since the powerful can still get away with anything in Mexico, few people believe his opponents’ pious claims that they are just trying to uphold the rule of law by indicting him. He may not be the right man for the presidency, but that issue should be for Mexico’s electorate to decide.

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If Andres Manuel Lopez Obrador’s plans go well, more than a million people will arrive early this morning in the Zocalo, Mexico City’s huge central square, to rally in defense of the wildly popular leftwing mayor.

After giving the rally his plan for a nationwide campaign of civil disobedience, Mr. Lopez Obrador will go to Mexico’s Congress, where he faces an impeachment trial. There, he will almost certainly be stripped of his political immunity, over a charge that his administration ignored a judicial order in the building of an access road to a hospital four years ago.

Supporters of the impeachment say a vote against would be a vote against the rule of law. The Business Co-ordinating Council (CCE), Mexico’s biggest employers’ organisation, has run full-page advertisements in newspapers urging Congress to uphold the principle that no politician is above the law. Mr. Lopez Obrador’s supporters counter that egregious acts of corruption by politicians routinely go unpunished, and that a vote for the impeachment would be a vote against democracy.

Stripping him of his immunity would lead to his removal from office. As soon as an arrest warrant is issued for him, a decision a judge must make within a week, he will also lose his political rights and be barred from running for the presidency next year, a race which all polls currently show him leading comfortably.

The 150 deputies of President Vicente Fox’s centre-right National Action Party (PAN) will vote in block for the impeachment, along with perhaps all but 40 of the 224-strong deputation of the Institutional Revolutionary Party (PRI), which ran Mexico for seven decades until losing to Mr. Fox in 2000. That appears to guarantee the simple majority of the 500-member House needed to dismiss him.

The mayor says he will not pay bail and would go to jail, something that could happen within days. Then, he intends formally to launch his presidential campaign from behind bars.

George Grayson, an academic at the College of William & Mary who is writing a book on Mr. Lopez Obrador, warns that his opponents are playing into his hands. “This would dramatize his willingness to suffer like a latter-day Jesus or a ‘Mexican Mandela’ at the hands of advocates of neo-liberalism whose exploitative policies have ‘inflicted poverty, unemployment, and misery’ on the masses. Thus, the PRI and PAN run the risk of converting a popular public official into a national martyr.”

Once the impeachment happens, two questions will become paramount. The first is whether he can regain his political rights, which would happen if the case is dismissed, if he wins an injunction, or he is found innocent. If he appears on the ballot after all this has happened, he could be unstoppable.

Supporters of the impeachment argue that once the first few days of publicity have died down, Mr. Lopez Obrador will find himself in an abstruse legal process, where his enemies are judges, who will be harder to demonize than the politicians he has been attacking over the last few weeks. If, as seems likely, more charges are added, it will be harder for him to clear all of them in time to be nominated for next year’s election. The people might slowly forget about the issue.

Mr. Lopez Obrador’s supporters argue that a judge would normally throw out the charges, on the basis that they should be directed at the planning official responsible for the decision. Further, Mr. Lopez Obrador says that Mexico’s constitution, which removes political rights from those under prosecution, rather than from those who have been convicted, implicitly breaches its international legal treaties by not according him the presumption of innocence.

A second question is the scale of the civil disobedience. If he successfully organizes blockades of main highways and airports, the damage to the Fox administration would be severe. If demonstrations turn violent, foreign investors might well take fright, while Mr. Lopez Obrador could lose the sympathy of the many Mexicans who currently see him as the victim of an injustice.

Analysts say that public reaction to any violence would depend on whether the government or Mr. Lopez Obrador were deemed responsible. If Mr. Lopez Obrador were kept off the ballot, they ad, a key question would be whether the Party of the Democratic Revolution (PRD) would choose to run another presidential candidate, or boycott the election.

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In 2001, long before political speculation took hold of the issue [“Decision on Democracy,” editorial, April 6], a legal case against Mexico City Mayor Andres Manuel Lopez Obrador was initiated based on a person’s right in Mexico to contest unlawful actions by any government authority. A judge ordered the city to cease construction of a road that violated the property rights of a citizen. Local authorities failed to comply with this judicial mandate.

Mexico ’s Supreme Court has ruled that judges whose resolutions have not been fulfilled by government authorities are obliged to present the case before a public prosecutor, who then must take appropriate legal action. In this case, and given the legal immunity granted to certain government officials, including the mayor of Mexico City, the public prosecutor must request that the Chamber of Deputies initiate a process to determine if such immunity can be lifted.

The case against Mr. Lopez Obrador has been in strict compliance with Mexico’s constitution and its laws. Mexico’s Attorney General’s Office will proceed in accordance with the decision made by the Chamber of Deputies. A federal court will decide whether Mr. Lopez Obrador perpetrated the alleged crime.

Respect for the rule of law, due process and separation of powers is inherent in a modern democracy. During the consolidation of Mexico’s democracy, such principles must be respected, notwithstanding the hardships involved. (By Carlos de Icaza, Ambassador, Embassy of Mexico, Washington)

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New York – Look across the global stage and the U.S. might look like a vulnerable giant.

Record trade deficits leave some economists worried that the dollar could collapse, sending interest rates sharply higher and the economy reeling. U.S. workers, meanwhile, worry that American jobs are increasingly susceptible to outsourcing overseas.

But for many U.S. multinationals, the global stage has rarely looked brighter. The Bureau of Economic Analysis, the government statistics mill that cranks out national output and income data, reported last week that U.S. companies raked in $315 billion of profits overseas last year. That is up 26% from a year earlier and up 78% this decade, far outpacing the growth of profits by U.S. companies at home.

” U.S. companies are very competitive. They’re booking record profit from all corners of the world and you’d never know that looking at U.S. trade figures,” says Joseph Quinlan, an investment strategist with Bank of America. He has been telling his clients to put their money in companies that have international sales exposure, because, “we believe the global earnings backdrop will remain constructive in 2005.”

Multinationals are enjoying a double dose of good fortune overseas. In slow-growing developed economies like Europe and Japan, a weaker dollar helps, because it means cheaper products to sell into those markets, and it means profits earned in those markets translate into more dollars back home. Meanwhile, for the first time in recent memory, emerging markets in Asia, Latin America and Eastern Europe are growing in sync and without financial turmoil.

General Electric says it expects 60% of its revenue growth to come from emerging markets over the next decade, compared with 20% in the previous decade. For Brown-Forman, the spirits company, a fifth of its sales growth of Jack Daniels, the Tennessee whiskey, is coming from developing markets like Mexico and Poland, a trend that is expected to continue. Meanwhile, IBM saw sales growth of 25% in emerging markets such as Russia, India and Brazil last year.

This robust performance overseas is helping to keep overall corporate profits strong, even though profit growth was expected to slow. Last year, earnings overseas accounted for 40% of profit growth for all U.S. companies, according to the government’s data. It has also touched off an intensifying debate among economists about whether the U.S. economy really is as vulnerable on the global stage as it appears at first glance.

In a recent paper on the subject, analysts at McKinsey & Co. conclude record U.S. trade deficits aren’t as threatening as they appear, because they are being driven in part by increasingly profitable U.S. companies, producing in places like China, Mexico and India, and shipping their goods and services back to the U.S. It concluded overseas profits account for $2.7 trillion in stock-market capitalization and those profits are helping to promote investments in new technologies and jobs abroad and back home.

“Far from reflecting the weakness of the U.S. economy, at least a third of the current-account deficit is actually evidence of its strength,” the report says. “The U.S. acts as the world’s financial intermediary, gathering up and allocating global savings to companies that then invest them around the world,” it later concludes.

McKinsey argues the important role of U.S. multinationals means today’s record trade deficits – a source of so much uncertainty about the economic outlook – could last much longer than many economists expect. The U.S. current-account deficit hit 6.3% of gross domestic product in 2004, a level that has triggered financial crises in other countries in the past. Classic economic theory holds the trade gap should make foreigners less willing to hold U.S. assets. That, in turn, should push down the value of the dollar, making U.S. products more competitive abroad and making foreign products more expensive at home. Theory holds this would ultimately correct the trade imbalance.

But McKinsey argues that labor is so much cheaper in countries like China and India that U.S. multinationals are unlikely to alter their international strategy anytime soon, meaning the old corrective mechanisms won’t work the way they used to. “For at least the next decade, we would expect foreign investment by U.S. multinationals to go on adding to the current account deficit as it is currently measured,” McKinsey says.

Last week, Goldman Sachs fired back at McKinsey’s conclusions about the U.S. economy’s place on the global stage. Edward McKelvey, a senior economist at Goldman, argues that it doesn’t matter who is driving the deficit wider. The end result is still that the world is awash in dollars and because of that the currency is still prone to sharp – and potentiall