ESTIMATED DATE. MEXICAN ECONOMIC SITUATION

Created: 10/30/1976

OCR scan of the original document, errors are possible

MEXICAN ECONOMIC SITUATION

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t.*ic following information concerning the economic situatior.

Based on everything gleaned fron Mexican and local American ccr.tiicts, President Echevorria has lost the confidence not only oi the business sector as such but also or virtually everyone who fc.is savings ir. Mexico. It is not believed that Echeverria can ruatcr* any degree of confidence and therefore siabiliiaticn cannot become effective as lonj; us he remains in office. The best the Mexican Gcvanusant con do under tha circumstances is to slow down capital flight or ate it nore expensive. There are no inz-eui-t* scansmproving the psychological cliiaatc, to reverse the price sj.-irr.l, to stop merchants and suppliers froiti hoarding, or to dispellooa; spreading over Mexico.

It is doubtful that the Govenicent of Mexico has any plana**

position in esse stubiliiation'docs not work. Currency exchange

controls are talked about but always with the recognition oi

difficulty of enforcement, given the long border ar.d

two-way crossings by Billions of people daily. As one police s*

official puts it: "We cannot evon control illegal border crcssevs;

how arc we going to control legal travellers who carry

There is no doubt that exchange controls would result in iwcecia^e

black Darket and large scale dunning of the peso. rue float of.

the -peso, with the peso finding its otm level would be very cirJicu:

with' respect to Keeping labor in lino. In tha final

s, siao fora of stsL'iiiration cust work, the only aitemsxiva

igid dictatorship which would icpose its policies by forcw Approved (Of jyL ^mm^mm^^'

DESTROY wrmrwr a

Original document.

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