Ana María Salazar. Mexico City. Bailout is probably one of the most radioactive words for an American politician. Since 2008 when the United States (U.S.) began the bailout because of the mortgage crisis and the global recession that affected certain industries, American politicians have had to balance between the needs of the economy and negative incentives to rescue the irresponsible. How to ensure that the auto companies, including General Motors, to become an industry that can be competitive? How to prevent the financial sector to fall again into highly risky and irresponsible investments?
These same politicians said that there are banks and industries that are so large, that impact many individuals and represent broad sectors, and shall not be allowed to sink because are too big, to fail.
This is the case of Pemex, the country’s largest company and therefore can not afford to fail, especially given the possibility that the most significant reforms to the sector has had since its expropriation are implemented.
Beyond the debate of whether the energy reform is appropriate or not, the fact is that the problem had to be solved before its magnitude: Pemex has a labor liabilities of 1.15 billion pesos, equivalent to 9.0 percent of Gross Domestic Product (GDP).
Pemex had become unworkable and little discussed publicly, perhaps because an economic or political solution was not conceived.
And although the legislative language regarding a possible rescue is far less catastrophic than analysts’ predictions and columnists, which ensures that the taxpayer would have to pay up to 700 billion pesos, the fact is that Pemex needs a bailout. The question is: what kind of rescue and what incentives will ensure the long term for the new “business” Pemex viability?
In the case of the United States, the government raised its bailouts different as loans or bonds where the “rescued” either General Motors or Chrysler, would eventually have to pay the Treasury rescue. I think it’s also important to note that in the few cases where they have identified problems of corruption, fraud or negligence could constitute criminal acts, justice has been somewhat slow but accurate to blame. This is what gives the government the political cover, because there have been questions about the use of the financial rescue, especially in the automotive sector.
But the important thing is to create incentives to prevent this from happening again. And the problem is that Mexicans bailouts seem to reward the gandallas.
Thanks to social networks we are flooded with pictures and videos of our honorable politicians and officials carrying out all kinds of illegalities, a reality show of all corruption. In addition, we may witness in more detail the lack of leadership that exists in our political class. Will this problem change with the rescue of Pemex?
You can imagine what would happen to a CEO if he -or her- publish photos packing a suitcase full of money or requiring payment for committing a fraud against the company?
In the case of the “Mexico Inc.”, exposing all the crap is not a mitigating to dismiss. The fact that everyone can see photos of the yachts and luxury cars bought by “Junior” is not enough. On the contrary, it would seem that guarantees immunity. Then, if the transparency is not enough, hitting the pockets of corrupt and inept should be a good incentive to behave?
Now we also have governors and mayors demanding the federal government to protect the abyss of debt that have accumulated. Can you imagine what could happen? Henceforth no ruler would care to pay their debts will dedicate to spend or steal with complete impunity. Daddy federal government will surely rescue.
It is not only a problem of impunity and the need for exemplary punishment. What is required are incentives for politicians and future Pemex officials change their pattern of behavior and be more responsible.
That is, send them to jail. Nothing like losing the freedom to change the behavior of a person, a politician and future entrepreneurs Pemex.
Apr 27, 2018 05 (100%) 4 votes The weekly summary of the most important news in Mexico by Ana Maria Salazar
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