Mexico: No Country for Old Tourists?


Here is a link to an article I publishd on AQBlog, titled “Mexico: No Country for Old Tourists?” on March 15th, 2013. Please feel free to visit and comment. Here is a verbatim copy of it in case you prefer to read it on my personal blog, though I recommend actually going to the site because of additional content, other blogger’s articles, etc.

Mexicans are used to hearing this: “in spite of the violence and insecurity, the Mexican economy is booming and attracting foreign direct investment.” After a recent visit to Monterrey, even Thomas L. Friedman wrote for The New York Times about this in “How Mexico Got Back in the Game,” providing a positive outlook on Mexico’s ability to compete in the global market. Then again, macroeconomics is just part of the story.

Yes, Mexico is becoming an attractive place for U.S. and Europe to invest. The commercial and technical factors to take advantage of are there. However, our current competitive position vs. China and other manufacturing countries should not downplay the fact that drug-related violence is directly affecting certain hotspots in the country. While the flow of foreign direct investment may continue and even flourish, both the reality and perceptions of violence in Mexico are damaging tourism. Brand Mexico is tail-spinning and losing value when it comes to vacation destinations. This should matter to a country that the UN World Tourism Organization (UNWTO) called the eighth most visited nation in the world in 2007.

Cities like Guanajuato, Los Cabos, Manzanillo, Puerto Vallarta, Cancún, and Acapulco depend on capital influx from foreign and national visitors, especially during vacation seasons like spring break and summer. Yet, Acapulco is set to register an all-time low for tourism this season. Congresswoman and Tourism Commission Representative Karen Castrejón Trujillo recently told the press that up to 80 percent of Acapulco’s hotel reservations that had been blocked earlier in the year have been cancelled since six Spanish tourists were raped while vacationing there. Only 300 of the original 5000 foreign visitors forecasted for this season (already an all-time low), will brave the trip. Imagine the implications for local businesses there. And even worse, isolated but high-profile cases like the violence in Acapulco or the border town of Reynosa are hurting the whole country’s reputation, just like the Zapatista guerilla conflict (which was contained to a couple of cities in the southeast of Mexico) did in 1994-1995, when foreigners were afraid to travel anywhere in the country because “they’re at war.”

Now, the Tourism Ministry is doing an exemplary job of trying to sell the Visit Mexico brand all over the world, but no amount of marketing will overcome the bad press about a crime situation perceived as widespread and out of control. There is no way that a beautiful ad highlighting the rich culture, cuisine, landscape and many more things the country has to offer, will supersede warnings like the one the U.S. Department of State issued on November 2012, telling vacationers, “we won’t tell you not to go there, but if you do, you’re on your own.” It’s no wonder South Padre Island in Texas is recording an all-time high domestic tourist season this year.

Friedman may be right about our ability to attract FDI, but is it enough of a consolation prize if investors are willing to send their money into Mexico just as long as they don’t have to visit it?

Why I am leaving Goldman Sachs – By Greg Smith


This was published today bythe NYTimes. An interesting Op-Ed “artilcle”/resign  letter by Goldman Sachs Executive Director worth discussing:

TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.


To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.


Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.

My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.


Drone flights over Mexico


Here is a link to my latest article on AQBlog, titled “Drone flights over Mexico” , published on March 31st, 2011. Please feel free to visit and comment.

Here’s a copy of it:


The recent news published by The New York Times on unmanned drone planes doing reconnaissance flights over Mexican territory has already spurred aggressive reactions by the legislative opposition to Mexican President Felipe Calderón’s Partido Acción Nacional (National Action Party, or PAN). Practically in unison, civil society is responding to these reactions and sending a message to Congress: get your head out of the gutter and do something for our country.

The Times article stated that Calderón and U.S. President Barack Obama agreed earlier this month to continue allowing surveillance flights over Mexico, collecting information and turning it over to Mexican law enforcement authorities. The report also discusses a “counternarcotics fusion center” already operational in Mexico City and the possibility of a second one being established in the near future.

Gearing up for federal elections, political parties like Partido de la Revolución Democrática (Party of the Democratic Revolution, or PRD), Partido Revolucionario Institucional (Institutional Revolutionary Party, or PRI) and Partido del Trabajo (Labor Party, or PT) jumped at the opportunity to accuse Calderón of violating Mexican law by allowing drone flights.

Former Foreign Minister—and current PRI Senator—Rosario Green was one of the more vocal: “I find it barbaric… What else is Calderón going to do in order to hand over the reins of the country to foreign interests?” PRD Senator Ricardo Monreal added: “This violates the Constitution, our national sovereignty and quite simply submits the country to a state of indignation, a subordinate and defeatist attitude.”

What is most interesting about this story is not the questionable legality of the secret agreement, but the public’s reaction to the opposition’s accusations. Rather than further taint Calderón’s image, readers of online newspapers like El Norte and Reforma have responded to these types of remarks with disgust. Civil society has demanded that politicians stop wasting the country’s time and resources in party politics and start instituting viable solutions to the widespread gang violence and narcotics problems.

Select reader comments of these online dailies include: “I would rather have Calderón hand over Mexico to the U.S. than PRI hand it over to the drug lords”; “National sovereignty being violated? What do you think the drug cartels have been doing for the past two years? The enemy is inside our home. You should worry about that”; and “Calderón’s is a brave decision aiming to weaken the filth that hurts real citizens and not the thieves that hide behind a Congress seat.”

Although Senator Green may ask why the Mexican Congress was not consulted on the Calderón-Obama agreement, I suggest she look into the way that she and her colleagues vote—not any way in representing their constituencies but rather moved by political objectives. And when Senator Monreal talks about “a state of indignation,” he conveniently forgets the ongoing investigations of his alleged money laundering scheme in 2006 and alleged ties to mafia groups.

The message is clear. Civil society is tired of the political discussions. They are tired of excuses and debates on whether or not a bold solution to an even bolder problem is constitutional. Instead of facing accusations, the action of Calderón and Obama—if proven to be true—should be hailed as a symbol of bilateral cooperation toward combating a common foe which has tarnished the Mexican way of life.

*Arjan Shahani is a contributing blogger to AQ Online. He lives in Monterrey, Mexico, and is an MBA graduate from Thunderbird University and Tecnológico de Monterrey and a member of the International Advisory Board of Global Majority—an international non-profit organization dedicated to the promotion of non-violent conflict resolution.