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August 23, 2009

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I kind of suspect there's a pretty strong psychological element, too, stemming from 1994. You were there in 1994, right? I wasn't, but I get the feeling from people here that 94-95 was much scarier than today. The GDP figures today don't seem to frighten people (both regular people and economists) the same way that the devaluation and the bank failures and the exhaustion of the foreign reserves did. As such, it seems like that for a lot of people, the foremost goal isn't to mitigate the crisis that is already unfolding (or even winding down) so much as it is to do whatever is necessary to avoid a '94-style crisis.

Relatedly, I also think that given the decades-long end-of-sexenio pattern of large deficits ans subsequent crises, there is a stigma among responsible economists against deficits.

As far as Calderón's spending cuts, you have to wonder if he ever really considered spending the money. It's odd how he announced the plan in January, a few weeks from the pre-campaigns kicking off, and then announced the cuts just after the campaigns.

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