Mexico's Petroleum Hangover

After a spending spree, economic upset arrives

With sudden and bruising harshness, Mexico's five-year economic joyride on the crest of rising worldwide petroleum prices has come to an end. Instead of enjoying swelling financial reserves and broadening prosperity for Mexico's 72 million citizens, the government of President José López Portillo finds itself confronting a witch's brew of staggering unemployment, rising inflation and pyramiding foreign debts.

In a high-risk maneuver to boost exports and slow the drain on the country's financial reserves, López Portillo's finance secretary, David Ibarra Muñoz, last month orchestrated a 40%...