Secretary of State Hillary Clinton’s arrival to Mexico this week came amidst a war of accusations between Mexican and U.S. government officials regarding drug trafficking violence at the border. Most contentious was the report by the U.S. Joint Forces Command which recommended the monitoring of Mexico as a “failing” state, one that could ultimately prove to be unable to withstand the assault of the powerful drug cartels.

Although trade and immigration are also part of the bilateral agenda, security has for now overtaken them as the most pressing issue. Mexico’s position regarding security cooperation with the United States is undoubtedly influenced by a fear of intervention and a historical distrust of U.S. motives. Lately, there has been a growing sentiment that in the war against the traffickers, Mexico has taken more than its share of the burden while the U.S. has settled for finger pointing and limited economic assistance.

Drug trafficking is acknowledged in Mexico and in the United States as a shared challenge that demands a shared strategy in its solution and not much will be accomplished by pursuing a blame game. That appears to have been understood by Clinton. Long the recipient of support by Mexican-Americans on one side of the border, Clinton appears to have successfully “crossed over” in her first visit to Mexico as secretary of state.

With a few well-thought declarations Clinton aimed to generate the atmosphere of good will needed before President Obama’s official visit to Mexico in mid-April. In Mexico City, Clinton told the press something that Mexicans have long been wanting to hear and that will pave the way for future—and more productive—negotiations on the subject. Marking a clear departure from the Mexican incapacity innuendos issued by other U.S. government officials, Clinton accepted co-responsibility for the drug-related violence in the border. Furthermore,  she asserted that the U.S. government has until now failed to control the “insatiable” consumption of its citizens or to stop the selling of arms to the drug traffickers, arms that have killed Mexican “policemen, soldiers and civilians.”

Paul Krugman, New York Times columnist and recent Nobel laureate, rightly pointed to the reemergence of Keynesianism in an article praising British Prime Minister Gordon Brown for his response to the current financial crisis (the partial renationalization of banks), contrasting it to the hesitant decision making process in the United States:

It's hard to avoid the sense that Mr. Paulson's initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as "private good, public bad," which must have made it hard to face up to the need for partial government ownership of the financial sector.

Commentators have already stated that the current financial crisis is far more serious than previous crisis because it threatens the global banking system as a whole. The collapse of the government backed mortgage system in the United States, followed by the failing of major investment banks, will entail a growth in risk aversion. This, in turn, will slow down investment and growth. 

Because neoliberalism IS the problem the solution has to be found elsewhere. The era of  extreme deregulation and the supremacy of the free market has ended. States have to intervene decisively in order to alleviate the negative repercussions of the crisis, particularly on the the poor.

Latin America has undoubtedly some serious challenges ahead. The conservative Calderon government initially declared that a crisis in the United States would have no serious impact as far as Mexico was concerned. Calderon was quickly proved wrong. The peso suffered a devaluation, and his government was forced to craft a crisis package which entails a significant increase in government infrastructure spending.  A large amount will go towards the construction of Mexico's first oil refinery in 30 years.

In a clear example of poetic justice for Mexican opposition, the Calderon announcement comes on the tails of a government-sponsored campaign that attempted to convince Mexicans that the only way to ever construct such a refinery and to modernize PEMEX–Mexico's national petroleum company–would be with the partial privatization of Mexico's most profitable industry and the letting in of foreign and national private investment.

It seems that the financial crisis has momentarily overriden the Calderon government's natural inclination to bow out to private interests and the crony capitalism which has thrived in the country ever since the first neoliberal reforms were launched in the 1980s.