The forecasts made by the government of Mexico can free it from the ravages of the debacle in the financial sector that yesterday became evident with the bankruptcy of Archegos Capital Management, a private investment firm that indebted with superlative amounts to Wall Street banks to finance big bets on a handful of stocks, mostly from companies linked to media and entertainment, including ViacomCBS, Discovery and Chinese giant Tencent and Baidu.
The scandal grew when Credit Suisse announced yesterday that two top executives will be fired and that the bank will suffer a loss of $ 4.7 billion, as the fallout from the collapse of a large hedge fund continues to wreak havoc on Wall Street. The bank’s board of directors has launched an investigation into the matter, and the chief investment banker and chief risk officer will leave. He also plans to cut his dividends to shareholders, stop the share buyback and, furthermore, suspend bonuses for some executives while he tries to recoup his losses.
The New York-based Archegos implosion is one of the biggest collapses of a hedge fund since the 2008 financial crisis, prompting calls for tighter oversight of Wall Street from lawmakers, including senators. Democrats Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts. Also drawing scrutiny is the lack of transparency associated with some business contracts and family offices and firms, the private investment vehicles of wealthy individuals, who thereby evade many financial responsibilities.
The mechanics of this new financial scandal that touches world-class media companies is no different from others. Archegos used a complex financial instrument, known as ‘total return swaps’. But the swap deals fell through when the share prices of some of the portfolio companies suddenly began to fall. When their bets went the wrong way, Archegos lenders began asking to be reimbursed, and when the fund was unable to pay, some banks sold their positions, causing share prices to fall further. Archegos himself collapsed. It’s unclear how big the private firm’s losses were, but several banks reported that they have suffered significant losses.
The financial and stock markets are operating in an accelerated and even risky way to fight a tough battle for the stabilization of the markets and the financial consolidation of companies with global interests. Just yesterday, there was talk of the assimilation of losses by some of the affected sectors and a restructuring of their operations; but, they will hardly be able to get rid of the eye of the congressmen who are not prepared to a new sacrifice for the American cause.
Something that may ease tensions is the proposal of the Secretary of the Treasury of the United States, Janet Yellen, who before the Chicago Council on Global Affairs asked other countries to join Washington to establish a global minimum tax for companies, and He promised to reaffirm the leadership of the United States in international economic policy. He said: “Together we can use a blanket minimum tax to ensure that the global economy thrives on a more level playing field in the taxation of multinational corporations and spurs innovation, growth and prosperity.” to be like the morning dew right now.
In this, which may be the new financial crisis, Mexico will be much less affected than other countries by the current government’s forecasts. It is going for stronger growth and lower real returns, as the resumption of productive activity accelerates and the central bank limits the increase in nominal returns. The double defense clamp: on the one hand, large investments in the productive sector and, on the other, direct support to the population affected by the economic and health crisis, avoiding corruption and patronage.
The prospects for the Mexican economy are so good that the International Monetary Fund itself has increased its growth forecasts, with the enormous advantage that the country has not been indebted and the budget deficit is kept at bay. There was initially talk of a growth of 3.5 percent and it is now at 5, with the possibility of further expansion as long as fiscal discipline is maintained.