Global Economic News
Remittances to Mexico Plunge With U.S. Depression
June 14 (EIRNS)The accelerating collapse in remittances to Mexico, from Mexican workers in the United States, has created a financial and economic crisis, compounded by the collapse of automobile production by now-bankrupt U.S. companies, the pandemic spread of the H1N1 flu that has severely cut into tourism revenues, and the offensive by drug cartels against anti-drug efforts by the Mexican government. Remittances represent the second-largest source of foreign revenue for Mexicosecond only to oil exports. But, beginning in late 2007, as EIR has documented, remittances began to decline. In 2008, according to the Bank of Mexico, remittance paymentscash sent from migrant workers, predominantly in the United Statesfell to $25 billiona 3.6% drop from the previous year. In April 2009, the total remittance payments were $1.8 billiona collapse of 19% over the already falling April 2008 figures.
"It can't get any worse for Mexico," Mauro Guillen, director of the Lauder Institute at the Wharton School, told the Washington Post. "There's the recession, the drug violence, the bankruptcies in the automobile industrythen they get hit by the flu pandemic, which just kills tourism, and now their remittances are under attack. It's crazy. And it is very sad. People are suffering." According to Bank of Mexico data, one in five Mexican families relies on some remittance payments to survive; and in many areas of Mexico, remittance payments, at the peak, were going to local infrastructure investment, where the Mexican government paid $3 in matching funds for every dollar deposited in local infrastructure funds. Those funds have now totally dried up.
UN: Four Million New Hungry People a Week
June 14 (EIRNS)The United Nations World Food Program (WFP)'s decision to cut food aid rations and shut down some operations is going to create 2 billion more hungry people this year. At a meeting of the Group of 8's development ministers, Josette Sheeran, the food program's executive director, said the world faces a human catastrophe. "This year, we are clocking in, on average, 4 million new hungry people a week."
The UN agency suspended food distribution to 600,000 people in northern Uganda as the result of its lack of funding, and has reduced its operations in Ethiopia and North Korea. It is also on the verge of cutting rations to 3.5 million drought victims in Kenya.
The WFP points out the cut in its budget, and the failure to meet the needs of the hungry, stems from the fact that the donor countries, in the midst of economic collapse, are facing spiraling fiscal deficits at home. These donors have told the WFP to scale back its reach, while the agency is receiving extra calls from countries seeking food aid as the economic crisis brings unemployment and a drop in remittances. Meanwhile, food prices continue to rise. The cost of corn and soybeans surged this week to levels not seen since late 2007.
As a result, the WFP has quietly started to reduce rations and close down distribution operations to conserve cash. It reduced emergency food rations in Rwanda, for example, from 420 grams to 320 g of cereals per person per day.