Sources

What Capturing A Drug Kingpin Means For Mexico's Mob Scene

The arrest of a notorious Mexican mobster belonging to the Zetas cartel is a significant accomplishment for President Pena Nieto, but it won't tame the bloodshed.

Mexican soldiers arresting cartel suspects in southwestern Mexico
Mexican soldiers arresting cartel suspects in southwestern Mexico
Redaccion América Economía

SANTIAGO - The recent capture of Miguel Ángel Treviño Morales, kingpin of the notorious Zetas gang, deals a serious blow to the most-feared drug cartel in Mexico. It also refutes speculation that President Enrique Peña Nieto is dedicating fewer resources to the war against cartels in an attempt to curb the violence they generate.

As a presidential candidate, Peña Nieto promised to reduce the growing number of homicides and kidnappings in the country. He emphasized public safety rather than the war against drug trafficking. This worried the country's partners in the North and some locals that military action against the cartels would lose priority under the new government.

Mexican marines captured Morales after intercepting a pickup truck in the outskirts of the border city Nuevo Laredo, where the Zetas' operations are headquartered. The narco-chief was travelling with bodyguards, an accountant, eight firearms and $2 million in cash.

It is the Nieto administration’s first big attack on organized crime. Since taking office in late 2012, the Mexican president has failed to reduce the country’s high levels of violence. In his presidential campaign, Nieto promised to dial back the presence of armed forces in the war against narcotraffic in favor of stepping up police action. Morales' capture by armed forces demonstrates the government’s continued use of military intervention to defeat the drug cartels.

More corporation than family enterprise

But whoever thinks that this decisive action will help reduce crimes related to drug trafficking is, sadly, wrong. Morales’ arrest is the eighth capture of a Zetas higher-up since 2011 — and the seven previous arrests have not resulted in less violence.

These days, the Zetas operate more as a corporation than a family enterprise, so they easily adapt to the arrival of a new leader. Besides, it is likely that Morales will be succeeded by his brother, Omar, which would make for a fast and seamless transition. If not, Mexico could be in for an outbreak of independent cells spread all over northern Mexico. Without a central command, these would just target one another, resulting in more kidnappings, extortion and assassinations.

Even if Morales' arrest does weaken the Zetas, it will almost certainly strengthen the Sinaloa cartel and its leader, Joaquín “El Chapo” Guzmán Loera — the most wanted man in Mexico.

The fact is that as long there is still a huge demand for drugs in the countries of the North, and they remain illegal there, there will be a buoyant market for organized crime in Mexico.

Ironically, the biggest blow to the drug cartels in Mexico could be the legalization of the cultivation, sale and consumption of marijuana in the U.S. states of Colorado and Washington, where talks are under way. If local governments were to regulate the production and sale of marijuana in those states, several analysts agree that this would significantly reduce the Mexican cartels’ marijuana market in the United States. Marijuana is the second-largest income source for the cartels, meaning that this would be a significant development.

As for Nieto, he has been more successful in other areas of governing. While Morales’ capture may not prove effective in diminishing violence in Mexico, it is nevertheless heartening to see the administration being tough on crime.

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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