Saturday, November 19, 2016

Award for Biggest Lie “Build the wall and have Mexico pay for it” — The envelope, please

Yeah, green light. Go ahead. I'll take care of the bill with Mexico
(Money pending in Congress

Here, my final design – go with this
(Bigger, nicer than China. Much bigger, better, prettier, dynamic)



SHORT INTRODUCTION: Note this headlines analysis on November 7, 2016: “6 Questions We'll Be Asking As Presidential Election Results Roll In.” And, FROM NPR no less.

Boy did they and everyone else in between get this election outcome 180° dead wrong… how and why are two imperatives that will be asked for years to come, and especially regarding this post’s subject for today: 

THE TRUMP WALL (and get Mexico to pay for it)…

Mexico seems to be on the losing side of the US presidential election, since incoming President Donald Trump has threatened to wall off America’s southern neighbor and demand concessions in order to continue as a favored trading partner.

Whoa, wait a minute, wait a frickin' minute:

Trump’s policies could have unanticipated upsides for Mexico as well.

If Trump builds his beloved wall, for instance, it will require around 7 million cubic meters of concrete and 2.4 million tons of cement (Investment firm Sanford C. Bernstein & Co. estimates).

Guess who produces just those materials, and all in the vicinity of the Rio Grande?

BINGO #1: Most cement producers in North America are Mexican, thus as an infrastructure program, Trump’s wall could boost the Mexican economy and thereby benefit Mexican companies.

KICKER #1:  In the world of cement producers, Mexico’s CEMEX ranks 7th largest and BTW, there are no American companies among the top 20 ranked at all.

NEGATIVE PLUS: Trump has protectionist ambitions and could decree that all cement poured for his Wall has to be American.

BINGO #2: Yep, CEMEX has extensive U.S. operations, with dozens of plans throughout the country that employs more than 10,000. So, with a Trump Wall huge economic opportunities exist for cement producers.

TRUMP DOOR #1 He could find a way to exclude Mexico’s CEMEX and other suppliers who are outside the U.S. from any contracting of The Wall, but that would be depriving their American employees of work. Or, not.

TRUMP DOOR #2:  If all the contracting went to firms with an American operations only, then those companies might be unable to fill orders for other clients, thus ending up giving companies like CEMEX to fill the gap and yep, you got it, more jobs for Mexico. Keep in mind that when global demand for anything goes up, it almost always benefits the sellers because firms hate to add costs when any bump in demand is temporary and building the wall would be that case: build it and move on and demand for cement/concrete drops tremendously. So those firms could ramp up production as much as possible at facilities already online, even if it allows competitors (i.e., CEMEX to snatch part of the pie).

Most analysts estimate that the Trump Wall enhancement portion to those that already exist for the nearly 2,000-mile border with Mexico could cost as much as $25 BILLION (yes, with a capital “B”).

Concrete, made of cement, would by far be the cheapest and most likely material.
That massive project could boost cement demand currently growing around 4% per year by one full percentage point once construction started. That’s a big jump for a mature industry in a slow-growing global economy.

KICKER #2: Since cement is costly to ship, it would make sense to source it as close to the border as possible. Ego: CEMEX has many facilities in the region that fit that profile — on both sides of the border – as do smaller American producers such as Cal Portland and Alamo Cement Company.

IRONY #1:  “As ludicrous as the Trump Wall project sounds to millions of Americans,” Bernstein wrote in their July report, “it does represent a huge opportunity for those American companies.” (I add: See, we created jobs, too, will say the Trumpettes).

Mexico could benefit from Trump’s punitive impulses in at least one other way.
The country’s currency, the peso hit record lows after Trump’s win, on the expectation that money could flow out of Mexico if Trump’s new policies harm its ability to export.

Yet a falling peso could actually boost Mexico’s economy, since it makes Mexican exports to other countries cheaper. The dollar strengthened after Trump’s win, by contrast, which makes American exports more expensive.

When a currency plunges because of some external shock, as just happened in Mexico, that’s not necessarily a net gain, since the shock itself could harm the economy more than a cheaper peso helps.

But if the peso were to stabilize at a lower level, Mexico would benefit. “The gradual depreciation doesn’t have to be problematic,” says Behravesh. “A longer-run depreciation of the peso would be good for exports.”

That may not help, of course, if Mexico finds the United States — its biggest trading partner, by far — closed for business.

That would harm many U.S. companies as well, and throw supply chains for the auto sector and other industries into turmoil. Trade is complicated, and Trump seems bound to discover that the old adage about the devilish details is truer than ever.
Stay tuned… it will get very, very ugly.

MEMO to Speaker Ryan and Sen. Leader McConnell: “The wall bill is in mail to you. I guess we have to call it, what, um… IOU from Mexico until they fork over the Pesos now that the work has started. Anyway, you guys work out the details. And, give Bannon and Ivanka a heads up, okay.” — /s/ D.T.

My campaign promise for a wall to the public:

Thanks for stopping by (one heluva story isn’t it) – oh BTW: why didn’t Trump put all this into perspective before the election? Oh, yeah right: “He did say he would surprise us later.”

F/N: Trump has worldwide licenses for others to build and use his name. How many Trump Towers are there around the Globe? Figure it out and count them here.

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