Saturday 22 August
Mexico frets about California plan to free inmates - (AP) –MEXICALI, Mexico — Mexican authorities have been sending more alleged criminals north to the U.S. for trial since President Felipe Calderon took office. Now a Mexican official is worried about a flow in the other direction. Although details of the proposal are still being debated in the California legislature, Moreno noted many inmates in the California prison system are undocumented migrants, and some could be deported once released. Read more here >>
In March, Mexico City’s local assembly passed a law that would require all stores to provide biodegradable bags. On Wednesday, the law went into effect, though there is a one-year grace period before authorities start to impose sanctions — which have yet to be defined.
Monday 3 August
A series of quite large earthquakes has hit the Sea of Cortez in the past few hours. The largest, a 6.9 magnitude occurred at 10:59 a.m. local time this morning. We are gathering information now.
Update 1 p.m. People report that they "may" have felt something in San Felipe but there are no reports of damage at this time. San Felipe is about 150 miles north of the area experiencing the earthquakes. Click on the graphic for the latest picture.
The shake map for the largest event, the 6.9 M quake is shown below. Fortunately, there are very few large towns in the area. Reports of the shaking are coming in primarily from Phoenix and Tucson. The yellow coloring on the graphic below is the area where light-moderate damage would be expected. Note that tsunamis are not expected in the Sea of Cortez because these faults are the type that slide rather than go up-and-down.
Update 2 p.m. Friends in tall office buildings in San Diego reported that they felt a sway at 11 a.m. but those on the ground floors felt nothing. The following traces from the seismographs of the ANZA network at UCSD in San Diego show the five hour period starting at 9 a.m. PDT and ending at 2 p.m. PDT. This clearly shows when the big quake occurred at 11 a.m. The yellow lines of the seismograph channels around the Southern California region went off-scale when the earthquake occurred and the "ringing" of the earth continues even now, but you can see the oscillations are now damping down. No additional reports of any shaking or of damage have been reported in San Felipe as of this hour.
Sunday 2 August
A new "Distinguished Visitor" program for San Felipe has been announced through the Conventions and Tourism Committee (COTUCO). The program will issue special visiting cards to tourists staying at participating hotels in the region and will act to help these tourists in warding off police tickets for "minor infractions" of the law. This demonstration program, if it proves to be successful, will be extended to other tourist cities on a national basis. The visitor card will contain the stamp and dates of stay (the period of validity of the card) at the hotel, together with emergency numbers for the bearer to call in the event of any problems. The police department (DSPM) will train its officers to adopt a positive and kindly attitude towards these tourists, provide guidance as to the criterion for a person being a tourist, and help in dealing with tourist matters. So far some 200 questionnaires received from Distinguished Tourists have indicated good satisfaction with the program. Check with your hotel when you make a booking to see if they are participating in the program.
For those voyagers using the Tijuana-Tecate-Mexicali toll road, new paving of a 25 km section is about to begin. The asphalt renewal program will start on the westbound lanes of the FIARUM section of the toll road between the El Centinela mountain and La Rumorosa, west of Mexicali. Work is expected to be completed by the beginning of October.
The economic crisis affecting the USA continues to drag down the Mexican economy and this trend is expected until the job losses stop and the US economy starts to grow again. More US job losses directly relates to fewer tourists and fewer purchases of Mexican-made goods. The latest casualty is the Hitachi plant in Tijuana which was primarily making plasma and LCD TV sets for the NAFTA market. The plant closed its doors on 1 August. At its peak, in 2007, it employed 3100 people. Job losses in Tijuana alone have been around 5000 this year and the state unemployment rate is officially listed at 9.75%, though many economists say this is an undercount of the actual situation. The situation is a mirror of that in neighboring California where unemployment is around 10% and we see shops and businesses closing in every mall and shopping center. In Tijuana, almost half the tourist businesses have closed on Avenida Revolucion and across the border at the Viejas Casino and outlet mall on Interstate 8 we also see around half the stores have closed. Owners of commercial real estate, such as strip malls, are going to be the next wave of defaulters on mortgages.
Another disastrous turn of events for the Baja tourism industry is the new inspection procedures that Mexico is about to introduce for vehicles headed south from California into Baja. Even though these inspections have not yet been initiated, the new "mountainous" speed bumps that have been built at the San Ysidro crossing are causing every vehicle to stop and crawl over them. Already 40 minute delays southbound are common on weekday afternoons, and Friday evenings are turning into a nightmare. With these 1 hour delays south, and 2-3 hour delays north many tourists are reconsidering whether to venture into Mexico at all. I am afraid that we are going to see the same situation at Calexico in the near future.
Finally, for today, a report from the Universidad Autonoma de Mexico (UNAM), says that the national oil company, PEMEX, is losing around 30 billion pesos per year ( around $2.3 billion dollars) due to fraud and theft inside the company. Crude oil is being stolen and sold to South American companies and pipelines are being tapped to siphon off oil and gasoline for local sales. Low quality US bunker fuel is being imported and sold off as high quality diesel..and on and on... ...>>
Thursday 30 July
I am hearing lots of complaints about spider bites. This is the season for them; these little critters get into clothing and on the bedding and are very difficult to see. Shake out any clothing that you have hanging in the closet, or stacked in drawers, before you put it on. Ideally, put clothing and sheets through a washing machine cycle frequently. If you find that you have small red blotches on your arms or legs that last several days, possibly even developing a small, hard, white center, these are classic spider marks. Generally they do not itch too much and they heal within a week without treatment. Check these two websites for more details... webmd...... biteremedy.
Note that this is also the peak season for stingray activity so shuffle your feet as you walk in the water. This gives the resting rays time to get out of the way before you step on them. If you do get stung, generally on the upper foot or around the ankle, it may feel as though you have stepped on a piece of glass - very painful! Soak the foot in warm water and add some vinegar to help inactivate the venom. Rarely will you need medical treatment from Dr. Abasolo, but be prepared for a day of pain. Incidentally, the jellyfish stings in the San Felipe waters are generally almost unnoticeable - unless you have allergies. Vinegar applied to the affected area of the skin will help to break down the toxins.
On the national front, President Felipe Calderon has announced a program to issue a new, secure, Citizen Identity Card to all Mexicans. This card will include a computer chip that stores full biometric data, such as eye scans, voice scans and facial recognition. It will augment the RFC number (tax ID) and the CURP (unique population registry key) in being able to positively identify and track every Mexican Citizen....>> There is no word yet on what new identification documents resident aliens will be required to carry.
Wednesday 29 July
Recently there have been news articles that are both very positive for San Felipe and negative for Mexico.
The Washington Post, in its series "Mexico at War", paints a bleak picture of the country's battle with the drug cartels. ....>>
It is remarkable that there has been litle, if any, problem with the H1N1 (swine flu) virus in San Felipe. In San Diego County there are now 735 confirmed cases and there have been 12 deaths. A few new cases per week are surfacing. We need to be taking all precautions now.
Saturday 25 July
The laws on using cellular telephones are changing as part of the effort to curb the use of these devices in illegal operations, primarily by the drug cartels. Starting back in April of this year, all new Mexican cellphones were registered with a new government agency (RENAUT) so that the user and the assigned number were uniquely identified. All existing Mexican cellular phones must be registered by 10 April 2010 or they will be deactivated on that day. Cellphones from other countries that are roaming in Mexico are not affected by the new regulations and are exempt from registration. Number portability services will also be introduced so that you can maintain the same cellular number even if you change phones or providers.
People who have a contract with the mobile companies where charges are billed to a credit card will be contacted by the service provider to bring their identity cards (e.g. FM-3, Acta de Nacimiento, Carta de Naturalizacion....) to the office and have their telephones registered. Those on a "pre-paid" basis, where they buy refill cards at the local pharmacies or dealers, will need to send a text message to the government agency to get their phones authorised and submit their Unique Population Identification Key (Clave Unica de Registro de Población , “CURP”). If you lose your phone or have it stolen from you, you must promptly notify your carrier (Telcel, Movistar etc.) and they will inform the government to deactivate it and prevent it being used in a crime. Each mobile telephone that you have must be registered in the name of the user, not in the name of the buyer. If you have more than one phone, all must be registered.
My advice would be not to rush and panic to get this registration done on your Mexican mobile phone. I am sure that we will learn of additional details and procedures to be taken as the registration proceeds.
Friday 24 July
Over the past few weeks I have been getting information requests from families and couples looking for economical hotels and apartments in this area; cost has been more important than location. I am seeing and hearing of an interesting phenomenon with respect to visitors to San Felipe. There has been quite a stream of tourists heading into town with their quads and beach toys. This flow started last Wednesday. Many of these tourists are from California and they are on shortened work-weeks, furloughs, or they are temporarily without a job and are getting unemployment payments from the state. They now have time on their hands for a little vacation and no deadline to be back for work. The result is that they are looking at places such as San Felipe where they can come and camp or get a $30/night motel room, eat cheaply at the taco stands on the Malecon or cook for themselves and keep other expenses to an absolute minimum. Many do not intend to buy Mexican car insurance in order to save the $15-20/day premiums. Several have enquired about taking back San Felipe shrimp and fish to sell to neighbors to further defray the cost of their trip - and possibly even make some money. This economic recession is generating new opportunities for a certain segment of the market!
Thursday 23 July
The Director of the Center for Economic Studies of the Business Sector in Mexicali (CEESEM) released figures yeaterday showing that the hotel industry in Mexicali is thriving. The hotel occupancy is now just over 60%; a 5% gain in the past year as more business travel to deal with government offices and maquiladoras has been taking place. On the other hand, tourist hotel occupancy rates at the beach resorts of Baja California are dropping compared to the same period in 2008. San Felipe fell 25%, Rosarito was down a staggering 47%, Tecate off 41% and Tijuana down 8%. Ensenada bucked the trend by rising 7% in the year, but the average annual occupancy of 42% is still at historic lows.
The Federal Secretary of Tourism, Rudolfo Elizondo, is reportedly working on an insurance scheme to compensate tourists in the event that they come down with influenza (such as swine flu) this winter in Mexico. The idea is to take care of people who fall sick while on vacation. No information was given as to whether the tourist will have to pay for the insurance policy. In a separate announcement, the Secretary said that tourism is slowly recovering though the trend is for more shorter trips and fewer longer stays.
Monday 20 July
The Secretary of Tourism of the State of Baja California has announced that the next section of highway construction between Mexicali and San Felipe will start soon. The section to be upgraded will be the 40 km stretch between La Ventana and the Ensenada road. No mention was made as to when the present, very slow, construction south of the Ensenada road will be completed.
Over in Sonora, there have been reports of masked bandits stopping cars and robbing people on the lonely stretch of road between the Baja California border, El Golfo de Santa Clara and Puerto Penasco. Requests are being made to Mexico City to send federal police and military personnel to patrol this 133 km stretch. (Note: this is a very isolated stretch of road across the Biosphere Reserve lands, not the main road to Puerto Penasco. By comparison, the San Felipe-Mexicali highway is more like a freeway and is patrolled by both the military, the federal police and the Green Angels. You are never out of sight of another vehicle. I would be more concerned about changing a flat tire in the desert heat.)
A pleasant diversion, with an overnight stay, on the way to San Felipe is to visit the upcoming wine festival in the Valle de Guadelupe. The festival runs from 6-23 August. More details can be found here....>>
Sunday 12 July
The full impact of the recent election results in Mexico is still emerging and they promise to confuse the picture on future economic investment and development in the country. President Calderon's party, the PAN, which is the conservative, business-oriented party in Mexico, suffered a serious defeat in the polls as is shown in the graphic below from the Economist:
The PRI party, which ruled Mexico for around 70 years until 2000, will now be back in control of the congress for the next three years and appears set to gain a victory in the presidential election of 2012.
President Calderon remains personally popular and his fight against the drug cartels still has a lot of support but, just as is the case in the USA, the economy is worrying everyone. One in six workers are now without a job at all; underemployment is common, with many people on shortened work weeks, and the economy shrank by almost 6% in the first three months of 2009.
This current slump, however, is not caused by mistaken policies of the Mexican government; rather it has been brought on by the dramatic slowdown of the US economy - the fall in manufacturing income because of lower demand by US consumers, the loss of money sent home by Mexican workers in the US because of job-losses there, and the decline in tourism revenue from a cash-strapped US vacationer. Falling world oil prices and the swine flu epedemic completed the setting for a perfect storm.
As part of a stimulus package for businesses, the government has offered low interest loans (1% per month) so that employees can be paid and layoffs avoided. I even started the application to get a loan for us at the Net to tide us over until the winter season was underway. One look at the daunting paperwork and the "securitization" requirements, however, convinced me that we could not possibly afford to do it. This is a common problem with doing business in Mexico. Laws are so complex, yet so unevenly enforced, that a small business cannot prosper.
In Mexico, the percentage of tax collected as a fraction of the Gross Domestic product is under 10%. Compare that with the same number in the USA (28%) and in socially advanced nations such as Canada (33%) and Norway (43%) where people have good health care and social safety nets...>> The low percentage in Mexico is because so many people avoid paying because this is such a "cash-based" society. The result is that legitimate businesses have to pay even more to make up some of the deficit. The Calderon administration has introduced the dreaded IETU tax (which I will write about some other time) and it is clear that many additional taxes and sources of revenue for the government will have to be found for the future. Mexico cannot continue to be so completely dependent on business conditions in the USA for its critical funding.
The new congress will have to tackle some very thorny issues that will affect us all. Energy reform and the restructuring of Pemex is a prime example. Petroleum production is falling by 10% per year and there are only around 13 years of proven reserves left at the current use rate - yet the government relies on Pemex for 40% of its operating money...>>
Infrastructure at every level of society needs to be renewed. Apart from highway upgrades, we need serious water conservation and sewage recycling programs. Restructuring of the monopolistic telecommunications and cement industries are other examples where major new productivity gains could be made. Education, in particular, is dominated by a union structure which badly needs to be changed if the children of Mexico are to be prepared for the jobs of the future. Mexico sank to 60th place (from 52nd last year) in the league table of competitiveness published by the World Economic Forum...>>
From a purely parochial perspective of the real estate industry, the thing that most likely will not now happen is the proposed change in the constitution to allow foreigners to purchase land in their own name without having to resort to getting a fideicomiso.
We can only hope that the PRI, with its new slogan “proven experience, new attitude” will take the challenge to now get something done.
Friday 10 July
The Mexican Government has now started constructing high-technology entry lanes at the Calexico downtown port-of-entry and this activity is being repeated at all of the border crossings between the USA and Mexico. When these lanes become operational in the summer of 2009, each vehicle crossing into Mexico will be weighed and scanned by electronic devices to ensure that the vehicle is not bringing contraband into the country. Primarily this is aimed at smugglers of weapons, ammunition, explosives and cash that are being funnelled to the drug cartels in Mexico. However, the new screening process will also catch all varieties of metallic, fibrous and electronic goods coming into Mexico and you may have to pay duty on any undeclared merchandise. While the scanning process is advertised to take under 10 seconds per vehicle, we can expect to see a lot of slowdowns as the calibration of the equipment is refined. Even a small delay of a few seconds will add up to major traffic delays. Computer estimates are that in the afternoon rush hour, 3-7 pm, a 12 second scan time will result in a 1 hour delay in crossing south into Mexico. Backups all along the main highway 111 in Calexico can be expected.
The 10 mile "off road" diversion to the east side of the San Felipe highway south of the Ensenada road junction continues. Work on the bridges over the arroyos seems to be taking a very long time and the hardpack surface of the temporary road surface is beginning to break down. Clouds of dust envelope every vehicle and the surface is developing significant potholes. It is tempting to go as fast as possible to get this stretch of highway behind you but be careful! Hitting a big pothole at 30 mph can burst a tire. I travelled on this section of road yesterday and saw one such breakdown. I was impressed and intimidated by the number of huge trucks that are hauling loads of fill back and forth in an endeavour to complete the work as fast as possible.
The clear and worrying problem is that the monsoon season is almost upon us. A big rainstorm in the mountains could result in a flood of water coming down the arroyos and under the newly-constructed bridges - and ending up flooding the temporary hardpack road. A sea of mud would likely result, stranding any tourist or construction vehicles and closing the road. Let us hope that contingency plans have been made.
Tuesday 7 July
Around 3000 tourists crowded into San Felipe for the 4th. July holiday weekend and soaked up sun on our beautiful beaches. In addition, there were entrants to the new fishing tournament in town (see below) and, overall, we anticipate that this brought in a very welcome $700K dollars to our local economy.
The National elections in Mexico were held on Sunday 5th July. Baja California's voters stood firmly behind President Felipe Calderón's National Action Party (PAN) in Sunday's federal midterm elections, bucking the national trend in which there has been a resurgence of support for the PRI.However, the voter turnout in Baja was a very poor 30%. The national average turnout was almost 45%. The PRI will have the majority in congress with 233 seats, PAN 146 and PRD 72. This means that most of the reforms that President Calderon wanted to pass, for example on energy reform and restructuring PEMEX, will be blocked or will have a huge cost in compromises in order to pass.
Many voters deliberately spoiled their votes as a sign of protest that none of the parties in Mexico is addressing the critical economic problems. Mexico is now in the worst recession since the great depression.
Back in the U.S.A, the latest unemployment numbers have triggered big declines on the stock market, and unemployed people are now defaulting on their credit card debt in increasing numbers (around 4.75% delinquencies). In addition, many families have had the credit limit on their cards cut significantly, often to the level of their outstanding balance on the card. The result is that they can no longer make any new credit card purchases. This is particularly a problem for locations such as San Felipe where people cannot put the U.S. gas and insurance costs on to plastic. Even if they bring cash for a hotel or restaurant here, they no longer have the security cushion of being able to use their credit card in an emergency.
Friday 3 July
There are reports of a significant earthquake of magnitude 6 in the southern Gulf of California near Los Mochis. The event occurred at 5 a.m. this morning. This earthquake occurred on the southern extension of the San Andreas fault which marks the plate boundary that is slowly separating Baja California and western California up to the San Francisco bay area from the rest of North America.
There are no reports of anyone feeling this shake in San Felipe. I have not yet heard if there was any significant damage in Los Mochis.
Thursday 2 July
Rubén de la Peña, head of the COTUCO organization in San Felipe, is predicting that the hotel occupancy in San Felipe for this 4th. July holiday will be about 87%. This will, indeed, be a big boost for our economy..
Incidentally, in spite of the elections that are being held throughout Mexico on Sunday 5th July, alcohol will be available (and probably consumed in great quantities) in San Felipe on that day. As a prime tourist destination, we are exempt from the general "Ley Seca".
The Government of Mexico has re-affirmed its intention to start inspection of all southbound vehicles at the US border crossings. Trial runs have been made between Brownsville and Matamoros and the system there has been able to reduce delays from an initial 40 seconds/vehicle to 12 seconds now. The inspection will start between San Diego and Tijuana later in July. Each vehicle will be stopped, weighed and license plate information verified in a databank. This procedure is to cut down on the smuggling of illegal arms and cash into Mexico as part of the war against the drug cartels.
The automated process is aimed to take less than 10 seconds per vehicle but it is likely that the system will require manual checks to be made of a percentage of vehicles. This will result in major lines building up in the USA as the transit of traffic southbound across the border is impeded. We are all aware of the delays crossing north into California, even though the border inspection process by US Customs is advertised to take less than 30 seconds per vehicle.
There is no word at this time on when the new inspection procedures will be implemented at the Calexico-Mexicali crossings.
Friday 26 June
It is with great regret that we note the passing of the Baja Java coffee shop at the very center of town. It was a wonderful place to have a croissant sandwich with a latte and be able to look down on what was happening on the main street. Business in San Felipe continues to be very slow.
Yesterday, a group of a couple of hundred people blocked the downtown Mexicali border crossing point for an hour and a half to protest the extremely high electricity rates. Other than delaying border traffic, not much was accomplished. (>>>)
Sunday 21 June
La Voz newspaper in Mexicali reports today :
Thursday 18 June
There were a couple of interesting news articles in the US press this week:
Extensive cheating was detected in the recent Tecate SCORE 500 race that started and ended in Ensenada. SCORE has implemented a system of having GPS recording devices in every vehicle entered in the race to counteract the tendency of drivers to use "short cuts" on the course. The new technology showed that 68 out of the 81 finishers that have had their GPS records checked so far cheated by speeding in restricted zones (public streets) or took short cuts on the course. Undoubtedly this revelation is going to substantially affect the reputation of SCORE events - it could be the equivalent of steroid use in baseball. (see more)
The Loreto Bay development, in Baja California Sur, appears headed for bankruptcy (...announcement and also here). Of the 6000 units planned or under construction, only 800 have been sold in spite of very extensive and aggressive marketing in the USA and Canada. The golf course and 155 room hotel have been closed and the Mexican development agency, Fonatur, is seeking to take over the project. Loreto is a historic town of about 15,000 people that was founded by Jesuits in 1697. The proposed development of the region would have increased the population to over 200,000 residents. However, nobody could have forseen the collapse in the demand for vacation homes by US and Canadian investors. In addition, the water reserves of the region would not support a population in excess of 30,000 people. Large desalination plants were proposed but these would have a major impact on the ecosystem of the Loreto Bay National Marine Park by substantially increasing the salinity of the water. A new electric power generating station would have had to be built to energize the desalination facilities and cope with the increased demand by the businesses and houses built.
Monday 15 June
Tuesday 2 June
The weather at this time of year is superb; you could not ask for a better climate to vacation in. Warm, cloudless, days on pristine beaches with gentle ripples on an idyllic sea. Tranquil evenings for outdoor dining - and no mosquitos! Ceiling fans are all the cooling you need for a relaxing night's sleep and the sight of the sun emerging from the Sea of Cortez for another brilliant morning is breathtaking. Beachfront hotels, condominiums, apartments and campgrounds are giving bargain rates. But where are the tourists? My list of the reasons that they are not here, in increasing order of importance, includes the following:
The influenza epedemic of April was a disastrous event for Mexico. However, the outbreak was identified quickly, the authorities took superhuman precautions to limit the spread and, thankfully, the virus turned out to be no worse than any typical influenza virus. For a few weeks, my mailbox was full of questions about the situation in San Felipe. Now, nobody even asks about the "swine flu" anymore. Mexico and the world have moved on.
People talk about the drug cartel battles that were occurring in Tijuana and Juarez several months ago. The world press was anxious to pick up every last detail of gruesome murders and beheadings of rival gang members. It was a feeding frenzy which fed the sale of newspapers, magazines and view-ratings of the big websites. It became a media event when other news was in a lull. It never was an issue in San Felipe in the first place. Mexico and the world have moved on.
You can drive down here from San Diego in under five hours and you don't have to worry about your safety. I do the journey every few weeks and the only thing that I do not look forward to is the ten mile diversion on a sand and gravel road just north of San Felipe. I admit it! I know that, as a result, I am definitely going to have to buy a new set of tires for my car very soon and I could also have to get a windshield replacement and paint job if those @#$% trucks don't slow down and observe the 40 km/hour speed limit!
Planning of the highway project optimized conditions for the construction crews building the bridges over the arroyos, rather than optimizing the travel conditions for the customer - the visitor. The bridge constructions are each a few hundred meters long but are the major cost element in the project. Laying the asphalt on the level, graded, sections in between the bridges is fast and efficient. Why, oh why, could they not just have had an "off road" diversion just around the bridges and allowed the traffic to get back on the highway for the rest of the journey? There is no review process and no apparent coordination between the construction contractors, the tourism industry and the people of San Felipe.
The United States has tightened the border crossings in the name of national security and this is having a significant and lasting effect on tourism for people traveling by car. Just yesterday the latest phase in this crackdown went into effect. Passports or equivalent secure documents are now required for everyone re-entering the USA. Studies over the past several years have consistently shown that people crossing the border are prepared to tolerate a 20 minute wait. Well, at some times of day the crossings between Baja and California are 1 to 2 hours, and 40 minutes is now considered fast. That is just unacceptable. I have mentioned this to various well-connected people in government and the answer is that the visitor should get a SENTRI pass! How absurd. Casual tourists are not going to submit to the long and expensive clearance process just to be able to come to San Felipe a couple of times a year. Even if they got a SENTRI card, what good does it do when you do not know which friends will accompany you or whose car you will travel in? Border crossing delays are crippling both commerce and tourism for California and Baja California. We must have a better, faster, clearing system. In the short term, for San Felipe, the only possible solution is to get daily air shuttle service at a reasonable price between San Diego and our local airport here.
The final item on my list is the economy. It is the elephant in the room and is likely to change the marketplace permanently. Every American has seen a deterioration in their economic condition. The house that they owned has probably fallen in value to half of what it was three years ago. Their retirement savings have had a similar fall. Unemployment is close to 10% and is continuing to rise. Icons of the American scene, like General Motors and Chrysler, Lehmann Brothers and Bear Stearns, are bankrupt. At least one of the major airline companies is also expected to fail. Credit cards are being cancelled and interest rates on overdue balances are hitting 30%.....
The immediate, practical, effect of this is that people have significantly cut back on spending. In fact the savings rate in the US has now climbed to its highest levels in 30 years. This cutback means that fewer purchases of every type are being made; less money is available for eating out, making frivolous trips, and impulse purchases. Many people at or near retirement are facing the reality that they must go back to work. Home equity loans, which made many of the second home purchases in San Felipe possible, have dried up.
This economic slowdown is not just a US problem, it is worldwide. Mexico is also feeling the effects as US industry scales back, manufacturing plants in Mexico are falling idle, tourism has dropped off a cliff and remittances from workers abroad have also tumbled. The Mexican government officially confirmed last week that Mexico had entered a recession and the signs are being seen even down to the local level here in San Felipe. Workers are having to take a step back. The girl who was the cashier at the market is back cleaning the fish, the man who was distributing the newspapers is back selling them, people who had full-time jobs are back to part-time, those that were part-time are back to unemployment.
At The Net, we have been forced to cut back our days of opening (to Monday, Wednesday and Friday 9am - 2 pm) as it is impossible to pay the high costs of electricity with so little foot traffic. Along Avenida Mar de Cortez, many curio shops are closed and several restaurants will curtail their days and hours of operation because people are not spending money. This morning, I went to Bancomer and was the only customer there for over half an hour.
Of course, it is an ill wind that blows nobody any good. If you have cash, this is a good time to be coming and shopping for real estate. Prices are down and agents are eager to make a deal. There is even talk that the Mexican government will change the law to allow foreigners to buy and hold property outright in their own name. If that happens, expect to see a miracle of activity and a land rush of unprecedented proportions. In the meantime, come to San Felipe knowing that it is safe and tranquil, that you can get a good rate at the hotel and that our street vendors will be really eager to see you. (TC).
Thursday 28 May
The long holiday weekend is over and we have been assessing the business in town. By-and-large, there was a good crowd down for the Memorial Day celebrations and most bars and restaurants did well. Our hotels were also very busy and had decent occupancy rates. However, we noticed that a lot more families camped out this year compared to last year. There was a steady stream of vehicles that went down to the south beaches area and spent the entire time down there playing on the beaches rather than driving back and forth into town. People brought their own food and drink and prepared simple meals for themselves. The National Olympiad also brought a very large crowd of youngsters to town for the entire week and the El Cortez hotel has been entirely dedicated to their use. Buses shuttled the competitors back and forth to town but these athletes are not big customers for our curio shops and bars.
Many stores are now going on to a summer schedule with reduced hours of operation or are even closing for the mid-week days when there is very little foot traffic. We, at The Net, are also looking at curtailing our work week in order to cut down on the very expensive electricity bills we get when the air conditioning is on.
Thursday 21 May
The value of the Mexican peso continues to climb against the US Dollar. Back last August, before the major economic bad news on the US economy, the peso had traded for several years in the range of 10-10.5 to the dollar. The plunge during the period October 2008 to March 2009 had taken the peso to almost 15 to the dollar. Recently, however, it has begun to strengthen again as you can see from this graph:
The effect of the weak peso was to deter Mexicans from crossing into the US to shop at supermarkets and discount stores. Now, however, we are starting to see some return of customers to the malls of California as the peso strengthens. In Calexico this morning, exchange houses were offering pesos for 12.6 sell and 13.1 buy.
Interestingly, the Canadian dollar has, by and large, maintained its strength:
Canadian magazines and real estate companies are continuing to sell Mexican real estate because of this and sales in favorite retirement areas like the Riveira Maya, Merida and Campeche are reportedly good.
Amy Izackson of KPBS in San Diego reported yesterday:
The Mexican health authorities moved aggressively to suppress this infection by rounding up stray, infected dogs in the city and in San Felipe.The disease responds well to treatment with antibiotics if caught in time. Vaccinations of people at risk, and fumigations of infested property have been undertaken by the authorities. The health advisory is over. More in La Cronica..
Tuesday 18 May
Yesterday, President Felipe Calderon inaugurated the new national fiberoptic internet network that is to be operated by the Comision Federal de Electricidad (CFE), the electricity monopoly of Mexico. Initially, this network will be used by big business for data networking but the hope is that eventually every residential customer of the CFE will be able to have high speed internet in their home and every school will be connected through this new network. This situation has come about because of the underwhelming performance of the national telephone monopoly, Telmex. Those of us in San Felipe are well aware of the extremely high cost of internet/telephone access here and the poor performance of the network in delivering the high bandwidth connections that are so badly needed in this new age of information.
When I first started The Net in 1997, our dedicated internet connection from Mexicali cost close to $1000 dollars/month for 64 kilobits/second, yet we managed to share that with our dial-up users and provide acceptable service for doing email and simple web browsing. In those days, emails were just text messages and websites had far fewer graphics. We did not have to deal with the flash animations and videos that are now ubiquitous. We did not attempt to download music and share files with each other. Software upgrades were a few hundreds of kilobytes at the most and we left them downloading overnight.
Things have changed spectacularly over the past few years as "broadband" connections became available, yet broadband means different things to different people. In many parts of the world broadband connections now run at more than 10 megabits/second, maybe 300 times faster than our old dial-up connections, and this has revolutionized our ability to get rich content in audio and video over the internet. We can talk to and hold video chats with people anywhere in the world at virtually no cost. Fax machines have become obsolete. Our business productivity has skyrocketed.
Our telephone connections in San Felipe are provided through Telnor, the "high technology" arm of Telmex that operates adjacent to the scientific and technological dynamo of Southern California. Broadband connections for landline customers in San Felipe get "up to" 1 megabit/second (Mb/s) download and 128 kilobits/sec (kb/s) upload speeds for around $26 dollars/month, but you have to subscribe for a local telephone line as well so the real cost is around $40/month. Notice the "up to" qualification. My personal best is 600 kb/s download and 64kb/s upload speed. In the campos north of town, Telnor provides wireless telephone service and there the internet speed is around 120 kb/s down and 32 kb/s up depending on the number of simultaneous users sharing the airwaves.
For about the same $40/month in San Diego I get broadband with an actual 9 Mb/s down and 900kb/s up, so the performance level is around 15 times greater in California for the same money, and I could double this performance for an additional $10/month.
Telmex is holding back progress in Mexico because of the regressive cost structure and the tight caps on bandwidth that it will make available to individual customers. The government in Mexico City understands this, hence the new initiative to try to bypass Telmex. For the sake of progress and the creation of new jobs for the children of Mexico, let's hope that this new CFE network spreads rapidly and becomes available down to the household level. Hopefully it could be included in the already high electricity rates that we pay at no additional charge. (TC)
Further information: FCH pone en marcha red de fibra óptica
Friday 15 May
Let me clarify the situation on electricity rates in San Felipe for this summer. Most residential users will find themselves on the 1F tarrif. If you use a total of less than 1200 kwh of electricity per month you get a bargain rate. Your maximum bill (including the 10% tax) will be 777 pesos or less. You can approximate what you will pay by using the figure of 0.65 pesos/kwh, so 900 kwh/month would cost you around 585 pesos.
Most people will find it difficult to stay under the 1200 kwh limit which is approximately 40 kwh/day. You may be able to achieve this by running only a single bedroom a/c unit plus your other household gadgets such as refrigerator, lighting and TV; though basic operations of these household necessities will likely consume around 15 kwh/day.
If your consumption exceeds the 1200 kwh/month limit, even by a single kilowatt-hour, you qualify for the "enhanced" rate. The calculation of this is more involved so to give you an approximate way of estimating your bill, I made an excel spreadsheet which plots your monthly consumption in kwh along the x-axis and gives the price you will pay in pesos on the y-axis. The graph below includes tax:
There is a breakpoint at 1200 kwh/month and another at 2500 kwh/month. At this latter point, you will be paying 2.6 pesos/kwh (including taxes) which is very expensive - around double what you might pay in most US cities.
The lesson is that we all need to be very careful in our use of electricity. Even though you might be well-off and can afford to pay several hundred dollars a month, you should heed the fact that our resources are limited and we all need to cut down on our consumption. Take it as a challenge to see how low you can keep your electricity consumption this summer. When cool evenings occur, let in the fresh air. In the heat of the day keep the sunshine out of your rooms by closing the blinds. Better yet is to put external sunshades on your windows; if you look around town you will see that lots of families put aluminium foil wrap on the windows where the sun shines in to reflect away the intense heat. It may not be elegant but it is cheap and effective! (We even do this at The Net where we have to pay the crippling commercial electricity rates.) Consider cooking outdoors on the barbeque as much as you can - the heat and moisture generated by cooking on a gas stove is a major load on your air conditioner. If you have an electric stove and hot water heater you have even more reason to cut down on their use. Turn off your (electric or gas) hot water heater for the summer - the water in the tank will still be over 90 degrees F in the summer and it is ideal for showering and for the washing machine. (TC)
Thursday 14 May
Time is getting very short for those of you who have not yet got your passports. The new regulations for entering the United States require everyone to have a valid passport (or passport card, sentri card) starting on 1st. June. Separate drivers license plus birth certificate documents will no longer be accepted. See the US Government Website for the official regulations.
In news of the local economy, the big Sony TV plant in Mexicali has announced that it is going to close down in September and transfer its remaining work to its Tijuana plant. More than 500 local jobs will be lost. Sony worldwide has lost money in its operations for the first time in 14 years as a result of the global economic slowdown.
Mexico depends for a major part of economic activity on three principal areas: Oil sales by Pemex, remittances by Mexicans working abroad, and tourism. Today it was announced that the remittances sent home by Mexicans abroad ($79 million dollars to Baja California in the past three months) decreased by about 5% over last years figures. The hotel sector of the Mexicali economy also saw a substantial drop in occupancy and a loss of 16 million pesos as a result of the swine flu scare earlier this month. It is hoped that the rescheduling of the national Olympiad events to June will bring more visitors. San Felipe has shared in this loss of business as a result of the flu epidemic.
Hurricane season has now started in the Pacific Ocean and runs from 15 May - 30 November. Here in San Felipe, our most probable time of receiving storms is from late August to early October and this is when we get most of our rainfall for the year. Now is the time to check your roof and clean out the feral cats from storm drains.
The summer electricity rates went into effect on 1st May and so it is now safe to use a little air conditioning. Bear in mind that if you use more than about 2000 kwh/month you will still end up paying an arm and a leg. Wherever possible, only turn on a small airconditioner for the room you are sleeping in and try to keep your consumption down to around 30 kwh/day. Close the windows and draw the curtains during the day and open them at night to let the cool breezes in. (TC)
Sunday 10 May. Mothers Day
The flu epedemic is fading into history. The immediate danger is over, thanks to the prompt and decisive action on the part of the Government of Mexico.
President Felipe Calderon and the Mexican nation deserve a resounding vote of thanks from the rest of the world for the speedy and decisive manner in which the current swine flu epidemic has been handled. The virtually-unprecedented action to shut down a major part of the country's economy for five days to stall the spread of the new virus demonstrates that President Calderon means business. All indications now are that the strain is no more virulent than the variety we had last year. Cases will continue to pop up but the general public has little to worry about.
Wednesday 6th. May
The flu epedemic appears to be stabilizing. Around Mexico, and the USA, there are new cases of transmission but the rate seems to be slowing and the virus strain does not appear to be any more lethal than the typical winter influenza at this point in the investigation. Bear in mind that in the US, in a typical year about 100 people a month die of influenza. The rate in Mexico is more like 20-30/month so what is going on now is consistent with a mild strain of the virus. The only concern is that it is a new strain - never before seen - so the health authorities around the world are having to treat it with caution.
The virus is now starting to move to the southern hemisphere as the winter season is beginning there and that is the time when this new strain will have the opportunity to evolve in cold, poorly ventilated, crowded, houses. What is feared is that a mutated, stronger form of this H1N1 virus will incubate during May-October and then be re-introduced to us in the northern hemisphere next winter. Be sure to get a new flu shot when the vaccine is available next November!
The Government offices around Mexico will reopen today after their forced long vacation. Similarly, commercial offices, restaurants and businesses that did close voluntarily are expected to be open again today. High schools and colleges will resume classes on 7th. May while pre-school and primary school children will return to classes on 11th. May.
We strongly encourage everyone to keep up the good work of washing hands frequently, coughing and sneezing into a tissue, and staying home if you don't feel 100% well.
Monday 4th May
Well, the great Chili Cookoff is history for another year. I was not able to go but I am told that it was the best-ever! I am sure Katherine will post something on what happened and who won so I won't steal her thunder...
On the national scene, the decisive action by the Mexican Government to stop crowds gathering and transmitting the new AH1N1 (swine flu) virus appears to be paying off. The rate of infections is declining because so many citizens have been staying at home. This means that there is much less contact between those that have the virus and those that are still uninfected. In a typical epidemic, each infected person gives the disease to between 2 and 3 other people. This is known as the reproductive number. A newly infected person will go for 24-36 hours before starting to feel the effects (aches, pains, coughing, etc..) and it is in that time that the infection is most easily spread to other unwitting people, who in turn pass it on in their 24 hours of still feeling healthy. Once the person starts to feel ill, they don't much feel like going out to party, and people that they come into contact realize that there is a problem and so they tend to avoid them. When no public health action is taken, and people are allowed to go about their daily routines without restriction, the number of infections will double every 2-3 days and a pandemic can result.
There are three other really important thing that have happened in this current flu epidemic:
Friday 1 May
Although the state of Baja California has no confirmed cases of the AH1N1 swine flu, the Governor, José Guadalupe Osuna Millán, has now announced that additional measures are necessary to minimize the possibility of infection. Nonessential public services and private-sector activities have been suspended across Baja California for the next five days (May 1-5 inclusive) under a federal health ministry order aimed at containing the spread of swine flu throughout Mexico. Essential government services – including police, medical care, military operations, customs and financial markets – will not be curtailed. Only essential businesses such as supermarkets and pharmacies should stay open, the governor said.
The measures come as Baja California takes other steps to ward off flu. Officials on Tuesday began monitoring all points of entry into Baja California – border crossings, airports, roads and ports – to minimize the possibility that an infected person could enter the state. Because of the confirmed infections in the US, it is considered important to check that ill people are not coming south into Baja. Eight swine flu cases have been confirmed in San Diego County and five in Imperial County; Baja California officials reported none as of yesterday afternoon.
The Roman Catholic Church announced the suspension of Sunday Mass in the Tijuana Archdiocese, recommending that worshippers watch it on television or listen on the radio. We have no word on what the churches in San Felipe will decide for this Sunday's services.