Mexico, the Next Brazil?

Why It Could Be Ripe for a Scandal

Enrique Pena Nieto, then the outgoing Institutional Revolutionary Party governor in the State of Mexico, is silhouetted against the national flag before addressing the audience in Toluca, September 5, 2011. Bernardo Montoya / Reuters

“When the tide goes out, you can see who’s been skinny dipping,” Warren Buffet once famously said about financial investing. As many investors are now discovering, the receding economic tide has caught Brazil in a state of undress. Slowing global growth and low oil prices have exposed not only a faltering economy, but also deep-seated corruption, which has helped send the country into a recession and damaged its reputation as a rising global player. Mexico, Latin America’s second largest economy, is not in such dire financial straits (buoyed in part by the relatively strong economic performance of the United States to which it is closely linked), but there are still plenty of chinks in its political and economic foundation. It would not be surprising to see the country in a similar state of crisis in the coming years.

In Brazil, the investigation known as “Operation Car Wash” has

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