As the economies of the world suffer grave consequences of bank crises and global deleveraging, a major threat is rising, not so quietly. This threat comes not from financial institutions gone bad, nor Ponzi schemes uncovered, but from the drug cartels in Mexico and other parts of Latin America.

Posing an equal risk to those terrorists who would attack America, the Mexican drug cartels have escalated their level of violence to such an extreme that it is not safe to walk in public in Mexico.

Their drug wars are voluntarily exported with attacks taking place in Texas and Nevada, though we suspect there may have been some incidents in Southern California, New Mexico and Arizona as well as other states far north of the border with the United States.

Marked by extreme violence and brutality, these drug cartel actions have risen to such an extent that American college students have been warned to stay home or find another place to visit other than the popular resorts of Cabo San Lucas, Acapulco and other beach resorts.

The Mexican government, long impotent to police the criminal activities in their midst, continues to be powerless or unwilling to face the challenges. They have seen what has happened in Italy's past when that nation took on the Mafia and Cosa Nostra. Fearing more for their own lives than those of their people, cowardly Mexican officials capitulate governance of their nation to cash-rich drug lords and thugs.

President Felipe Calderon's acknowledgement today that his nation faces its most difficult challenge in fighting the cartels stands in isolation from the actions of Mexican officials who are far more willing to turn a blind eye to drug lords who pay officials for their inaction.

This criminal crisis can be directly correlated to U.S. drug policy, which today also changed with Attorney General Eric Holder's announcement that the Drug Enforcement Agency will no longer raid California cannabis clubs and that the Federal government will allow the individual states to make their own marijuana policies.

From a political perspective, of course it has been expedient for American presidents to declare war on drugs, but in fact, it is a war we have not been winning. The Mexican drug lords are the winners because there is a strong market in the US for the marijuana and cocaine they supply to American drug dealers.

When an American dealer defaults on their payments, unlike the housing crisis, the Mexicans do not impose a foreclosure as banks do, they use the ultimate sanctions: bullets, machetes or other equally fatal means of enforcement.

The continued market for illicit drugs in the US remains strong, and in this economic crisis, is likely to rise as more people turn to drugs to avoid the reality of their financial woes. By leaving drugs unregulated and illegal, American policy has created the greatest possible market for the products illegally exported into the US by the cartels.

While we don't advocate drug use, US policy must acknowledge the simple reality that the policies to date have backfired. Not only ineffective, these policies have created a huge financial drain on government at all levels. It's not only about the cost of enforcement and border security, but also the impact of illegal drugs on the states and municipalities and on the healthcare systems and private businesses.

A more practical approach that would almost immediately deflate the cartels would be if the individual states were to legalize, license and control the growth, production and sale of marijuana.

Legislation in California would do this and it is calculated that in that one state alone, more than $1 Billion in revenues would come to that state. Nationally, it is estimated that more than $40 Billion in revenues could be generated by the 50 states.

Government should have learned its lesson from the era of Prohibition, but unfortunately, over the course of the past 80 years, the lessons of that dark period in American history have been ignored. That lesson is not simply that prohibiting the use of drugs or alcohol creates a greater market for the prohibited substance; nor that good and decent citizens will go out of their way to obtain that which is prohibited. It is that in prohibiting such substances, there is a consequential concomitant rise in criminal behavior that directly corresponds to the prohibition. With that, there is also a consequential increase in the cost of enforcement.

One of the economic factors helping to create the Great Depression, surprisingly, was the fact that the individual states lost the revenue from liquor taxes and the Hoover administration was unwilling to supplement those losses from the US Treasury.

Today, as the Obama administration is preparing to write multi-billion dollar checks to the states to offset dramatic losses in revenues and increasing costs, they should look seriously at the costs borne by the states to enforce national drug policies that clearly have failed. A serious study should be undertaken to review the impact of existing policies on local and state government.

Attorney General Holder's actions today were not merely commendable, but wise and prudent; both financially and practically. It was a small first step in the right direction. We also praise Rep. Barney Frank (D-MA) who raised this issue in the 110th Congress; an advocate of a sensible drug policy for some time.

Meanwhile, back in Mexico, more than 5,300 people were killed in that nation in 2008 as a direct result of drug cartel violence. Our intelligence shows that only a few dozen have been killed in the US by the cartels, but this has been a growing trend, with other violent actions taken on US soil.

The governor of Texas has asked the Obama administration for help with border patrols and other policing efforts to prevent cartel violence reaching further into the Lone Star State (once part of Mexico).

Admittedly, President Calderon has, last Friday, added 5,000 military troops and 1,000 police to the existing team of 36,000 troops assigned to the borders and other areas of Mexico, but in 2008, 72 troops were killed, along with 120 police officers; the direct result of drug cartel terrorism. It is no wonder Mexican officials fear taking action.

Nevertheless, it is imperative that President Calderon and his officials succeed in breaking up the cartels. The best way, we believe, would be for Mexico to legalize marijuana; license the farming, packaging and production of their crops and rely upon legal trade. While US policy remains as it is, other nations might accept Mexican marijuana as an importable product. The Netherlands, for one, might kick off an international trade with Mexico, bringing significant revenue to the Mexican treasury. Once legalized, licensed and produced under tax authority, the necessity for illegal activities diminish naturally and the violence would subside.