By RICARDO CASTILLO
It seems that about once a week, U.S. ratings are playing an old racist version of the Whac-A-Mole carnival game with Mexican President Andrés Manuel López Obrador (AMLO). In these now-defunct fairs, pitchers would be given three balls to throw at a black man – a real person – in an attempt to hit him.
Behind the blatant racism and perhaps hatred that this game entailed, people played it for fun. But the attackers always got outsmarted by the target and hitting him was practically impossible. The guys behind the hole where the ball was supposed to hit the target in the face were always faster than the throwers, even if they pitched well. And the intended targets always ended up laughing at those who were trying to hit them.
Take the racism out of this old image (I got to see one of these games back in 1944 – I was two – in northern Mexico at a visiting carnival from south Texas) and put AMLO behind the hole instead of the black man, and you have a portrait of what’s been happening over the past month between the Big Three international credit rating agencies — Fitch, Moody’s and Standard and Poor’s (S&P) — and their current Mexican target, President López Obrador.
In the Mexican financial press, these rating companies are wreaking havoc on the national economy by sending local financial experts into fits of terror, proclaiming a hit at every ball thrown at the man behind the opening.
On Monday, March 4, S&P threw a smoking curve ball at Mexico, downgrading the rating of the state-owned oil company Petroleos Mexicanos (Pemex). The agency’s ominous forecast was: “The negative perspective of the rating on a global scale for Pemex reflects that of the company’s sovereign (national) debt. In our opinion, the close relationship between the company and the federal government will be maintained over the years to come.” As a consequence, S&P downgraded Pemex’s stand-alone rating from BB- to B-.
S&P also downgraded the credit ratings of Mexico’s state-run Federal Electricity Commission (CFE), which provides about half of the country’s electricity demands, and 71 Mexican banking institutions.
But that was not the first fastball the pitching stars at S&P have thrown at AMLO. Just a week before, the financial whiz kids and Standards & Poor’s downgraded their evaluation of Mexico’s national debt from stable to negative, forecasting a decreased economic growth.
The root of the problem seems to be the fact that all of the above rating agencies are in sharp disagreement with AMLO’s statement in mid-February declaring that Pemex has the full support of the federal government and that the company will pay “on time” all its financial commitments.
And what does López Obrador have to say about the strikes that are being fired his way by the Big Three? AMLO has bigger fish to fry and more important concerns to oversee, the main one being keeping his ever-growing support base of Mexican voters at ease.
In fact, one Mexican financial analyst said that there is no reason to worry about the downgrades, pointing out that the rating cuts are intended to be a warning to the president to “be pragmatic,” whatever that may mean. If there is one thing AMLO has been doing in his less than 100 days in power, it is to try to restore order in Pemex’s management. Indeed, what former President Enrique Peña Nieto left of Pemex is, as AMLO says, “a pigsty.” Curbing fuel theft was only the tip of the iceberg.
And what did AMLO have to say about the lastest100 mph pitch? His answer was not directed at the rating agencies themselves, but to the Mexican people – live and in color – as he visited three states over the past weekend, Chihuahua, Sonora and Baja California Sur.
“We’re doing really well,”he said. “The nation is growing; we’re doing well. There’s no other nation like Mexico.”
The crowds – calculated at over 10,000 people in each state – cheered and welcomed the news of brand new assistance programs coming their way. Incidentally, the biggest cheer came in La Paz, Baja California Sur, where AMLO announced he would not allow TV Azteca owner Ricardo Salinas to do open-pit mining in their municipality.
AMLO differentiated the decision of cancelling the open-air gold mining project from others in which he has called for voting referendums. “This is my decisions and does not need to be voted on,” he said. “Other decisions that needed referendums were works in progres,s such as the Mexico City Airport and the Morelos thermal electric plant. This is my call.”
In the three speeches he delivered over the weekend, he repeated his core message:
“I’m telling the international finance ratings companies that we are not going to run this nation into debt, and that they should be at ease as there will be no deficit. We’re not going to spend more than what are tax collectors bring in. (The agencies) will see both financial and managerial discipline.”
In short, AMLO is behaving like the man behind the board at that long-ago carnival, where foul-mouthed teasers hurled insults to attract more pitching customers.
My analogy may seem offensive to some readers, but I believe it fits because AMLO loves baseball and also because as the rating companies come up with each new warning of “financial danger” for Mexico’s economy, they stir up the cackling hens of Mexican financial journalists. All the polls show that AMLO’s popularity is increasing by the day and his followers firmly believe, as the old Mexican popular song goes, he will show us how “to pull the ox out of the ravine.”