33. What do you think about the banks’ showing very big profits in their financial statements? And, what do you think about the value of companies in the Mexican Stock Exchange in 2006?

The stock exchange.  Stock exchanges have been bullish for several years, after the severe fall in March 2001; a very harsh destruction of value that seriously affected American pension funds, etc. that fortunately did not contaminate the banking or the real estate sectors.

The medicine they applied then was very efficient; the rates were meaningfully reduced.  When rates drop significantly, stocks increase their value, and thus these assets are not affected.  I also believe that this came due to the surplus of money and the companies’ bottom line was not hurt and markets recovered.

The stock exchange has experienced a major increase; there is a lot of money in the world; there can be many reasons for this, but nevertheless there is still a lot of money; the American deficit, oil, petrodollars, there are many factors; mandatory savings in pension funds are being deposited everywhere; Chinese, Asian savings, etcetera.

The thing is that stock exchanges have been markedly bullish, and there is no recession in the United States, I believe that the entire world is wondering what is happening in the United States.

And the decrease in growth in the United States is not bad, because instead of growing … I believe it grew 4.5 last year and it will be alright if its growth is moderately slow.

I would say that yes, stock exchanges have increased significantly.  We have seen América Móvil.  But América Móvil is not the company that has grown the most in México.  The index has increased more than forty per cent in the last four to five years,  since 2003.  It is important that this is backed up by results, growth of companies, cash flows, and that interest rates do not change suddenly, right? because at the end of the day interest rates change things.

If you remember, in December 82 governments were abusive as their tax deficit was significant and bankers irresponsibly lent money to everybody.  At that time we had the famous petrodollars, etcetera, and rates rose to 22 per cent.  Then I would like to see what happens with a 16 or 18, or ten or an eight and not a 22 per cent rate.

Therefore the monetary policy is also a culprit as at the time it raised the interest rates too much.  That was the medicine then, to eradicate the pain and perhaps it was useless.

We have already seen a similar case.  Mexico has also undergone some crisis; I cannot see the reason for the 87 crisis, there were more reserves that Cetes (CDs).  The 87 crisis was caused by some erroneous decisions made; I believe the same thing happened in the world in 82.

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