> >From Monday's FT:
>
><quote>
>
>Euphoria over the [S&P] upgrade, however, was followed by a drop in
>Mexican markets after the central bank tightened monetary policy to stave
>off inflation sparked by higher taxes and decliing electricity subsidies.
>Provisional figures, meanwhile, suggest the ecnomy shrank 1.2 per cent in
>the 2001 fourth quarter.
>
><unquote>
>
>Let me get this straight -- even if you agree, as a poor country, to the
>mad and sadistic idea of tightening your fiscal belt when times are bad
>(which is where the higher taxes and declining subsidies are coming from
>in the paragraph above), you then have to tighten monetary policy on top
>of that in order to make up for the inflation that comes solely from
>tightening your fiscal belt?
>
>The inquisition's got nothing on the Washington Consensus.
That tightening is mad on several fronts. Higher taxes and declining subsidies are one-off things, and shouldn't kick up the inflation rate permanently. To tighten just because of that is crazy enough - but when the economy's shrinking? Evil.
Oh, I can feel my hatred coming back. It's so comforting to be back in the groove.
Doug