The failures of the nationalist Mexican President Andrés Manuel López Obrador (AMLO) are starting to be realized in a huge way.

First, the economy is decelerating, second, murders across the country are hitting record highs, and third, there are small towns filled with Americans that cartels are now invading.

Mexico's economy entered a recession in 1H19, AMLO promised to "Make Mexico Great Again," though an economic downturn has unfolded and has derailed his beautiful plans of revitalization.

An imploding economy comes at a time of worsening cartel wars and record homicides, a story we've been documenting for the past five years. So far this year, 28,741 people have been killed as the socio-economic crisis deepens.

President Trump is ready to designate Mexican drug cartels as terrorist groups, and this will one day allow the US military to fight drug cartels on Mexican soil.

And as Bloomberg reports Tuesday, drug cartels have poured into San Miguel de Allende, a colonial-era city in Mexico's central state, home to 160,000 folks, and approximately 10,000 Americans and Canadians.

What's currently happening are violent drug gangs are now a demanding property tax on small businesses and have flooded the town with cocaine, resulting in turf wars and a jump in homicides.

The chaos began several months ago, but before that, the small town was peaceful. Now people are dying in a hail of gunfire every week.

Cartel members are killing non-compliant business owners who refuse to pay the property tax.

Manuel, a local restaurant manager, told Bloomberg that this kind of crime was unimaginable over the summer. "It's still hard to believe" that there's so much chaos across the city.

San Miguel has joined the list of popular destinations, such as Cabo San Lucas, Cancun, and Mexico City, where drug wars have erupted over the last several years.

ALMO's laissez-faire approach in crime-fighting has widely been viewed as a failure.

"Security is a nation-wide problem now, and unfortunately no one can escape it," said Javier Quiroga, head of the bar and cantina association in Guanajuato, the state where San Miguel is located. "It's getting harder for people to go about their regular activities."

Local reports said cartels had not attacked the resort part of town, popular with tourists and ex-pats. Large multinationals, such as Volkswagen AG and General Motors Co., who have manufacturing facilities in the area, have also reported that cartels aren't disturbing them.

At the moment, cartels are only targeting small business owners, but that can certainly change.

The surge in cartel violence has led to hotel occupancy rates declining in August, down 15% over the year, according to government data.

Some shop keepers have fled the city after failing to pay cartel property taxes. Others have been murdered.

Cartel members have dropped off sacks of cocaine to shop owners, demanding them pay for the drugs.

Bloomberg notes that one reason for the surge in violence is due to "the government crackdown on fuel thefts in the region spurred cartels to look for alternative income sources to finance their operations and turf wars."

Cartels "are looking to make a name for themselves and to get some money quick," said Gladys McCormick, a professor of Mexico-U.S. relations at Syracuse University in New York. "Extortion is the easiest way to do that."

McCormick said the violence in San Miguel "is a dark cloud on the horizon because it heralds that nowhere is safe anymore. The fact there is such an international presence in San Miguel de Allende guarantees that the fear felt inside the city will echo beyond Mexico."