With its economy sagging badly, a crisis of confidence is suddenly engulfing Mexico and pushing the government of President Jose Lopez Portillo to the wall.
''Never have I seen Mexico so economically troubled,'' comments a longtime foreign observer who has just visited Mexico on a business trip.
''It is as if everything was collapsing around Lopez Portillo and his administration seems powerless to stop the crash.''
There is no mistaking the trouble Mexico -- and Mexicans -- are facing. It was brought home to all Mexicans several weeks ago as the price of tortillas, the basic cornmeal staple in the Mexican diet, doubled.
So far, the Lopez Portillo government has taken few steps to ease the situation. But this weekend it moved with considerable speed to temporarily close foreign exchange markets and announce foreign currency bank accounts in Mexico would be convertible only to the Mexican peso.
Although both moves were clearly aimed at cutting off a mounting flight of capital out of Mexico, they sent shock waves through the country's business and financial communities. And it was unclear whether in the long-run the government action would help or hurt the situation.
For several years now, Mexicans have considered Mr. Lopez Portillo increasingly inept -- despite presiding in his early presidential years over an economic boom and despite what some regard as worthy efforts on his part to spark negotiations between the United States and Nicaragua. Whether these latest moves will alter that image remains to be seen -- although Lopez Portillo is a lame-duck President with only 3 1/2 months remaining in office.
It is perceived inactivity at the helm at the present time, in the face of serious economic trouble, that has led to Mexico's crisis in confidence.
The basic problem is that Mexico does not have enough money to pay its bills. Here are some of the troubles:
* The peso, pegged loosely for almost six years at 25 to the dollar, sank drastically in the past six months and now hovers at about 70 to the dollar. It had been 90 pesos to the dollar at the beginning of last week.
* The prime rate is 58 percent -- and could go higher. Few, if any, businesses can afford that sort of interest.
* Inflation, kept under control for a number of years at 20 to 30 percent, now is climbing at a rate of 70 percent. Some economists say it could reach 100 percent by year's end.
* Capital flight in an outflow of dollars -- which the weekends moves were designed to halt -- has been surging with each rumor of devaluation or new financial problem. Middle-class Mexicans with pesos in their checkbooks were buying dollars as fast as possible and sending them out of the country. Little will come back any time soon.
* There has been a surge of business bankruptcies. The recent collapse of Alfa Group, Mexico's leading business empire, sent shock waves throughout the economy. There are suggestions that Alfa's leading rival, the Visa Group, is facing similar problems.
* Construction is at a standstill, particularly in Mexico City, where work on several new hotel buildings, office complexes, and shopping centers has been halted in midstream.
Lopez Portillo correctly puts some of the blame for Mexico's problems on the world economic situation. But that cannot mask what some Mexicans now feel is the ineptitude of his administration when it comes to financial matters.
With his term in office due to end Dec. 1 -- and President-elect Miguel de la Madrid Hurtado preparing to take over -- some Mexicans are breathing sighs of relief.
The next 3 1/2 months are critical. Mr. de la Madrid is working on an economic program. He must act fast -- not only to shore up confidence, but also to find the money to pay the foreign debt, now running at perhaps as much as $80 billion, of which Mexico must pay more than $20 billion this year in debt service charges alone.