Mexican President Felipe Calderon is urging lawmakers in his country and in Brazil to consider a free-trade agreement between the Latin American giants, Bloomberg News reported.

If it's approved, this would be no small economic development. First, the pact would further diversify Mexico's trade base: currently, 80% of Mexico's exports go to the United States. Second, and perhaps even more significant, the action would create spin-off commerce in each country. Typically, when free trade pacts are passed, they lead to increases in GDP and in aggregate demand, which leads to new businesses.

Food manufacturers promised Mexico's government on Wednesday they would freeze prices on more than 150 food products to help families cope with the rising cost of food, The Associated Press reported Thursday.

Mexico President Felipe Calderon said prices for goods including beans, canned tuna, fruit juices, coffee, ketchup and canned tomatoes will remain fixed until December 31, 2008, The AP reported. Calderon blamed rising food prices on surging global energy prices, food demand in China, and the use of corn for ethanol production.

Good intention, wrong method

Economist Glen Langan said he agreed with the need for food assistance for Mexico's poor, but disagreed with the mechanism.

"A more effective program would be a larger cash payment or food subsidy to citizens," Langan said. "The pricing mechanism should be kept in place, because it has many benefits. Cash payments or subsidies to poor residents are much more targeted and don't provide a benefit to those who don't need it. [Mexico President] Calderon did announce a monthly subsidy, 120 pesos [$11.60], but it isn't large enough."

"It's a time of hope," claims Ana Laura Pulido, a real estate broker in Mexico. While its northern neighbor remains in the depths of a housing meltdown, the Mexican real estate market has been booming.

Mexico has long found its economy overly sensitive to the happenings in the United States, so to see the country's real estate market thriving despite the turmoil in America is a very encouraging sign for our southern neighbor.

And don't think that American investors haven't started to notice this new trend.

According to Clark McKinley, the spokesman for the nation's largest pension fund, the California Public Employees Retirement System, his fund sees greater returns for its money in Mexico and has already decided to pump over $300 million into Mexican real estate funds.