Middle classes bear the brunt of Mexico's pain

Austerity measures are causing unrest but failing to revive the economy, writes Phil Davison from Mexico City

Concepcion Gomez, a 68-year-old grandmother from the ragged Mexico City suburb of Neza, pointed to the big cardboard box at her feet. It was full of pots and pans. "These are about all I have left. But they're going to buy milk for my grandchildren."

Mrs Gomez was among hundreds of Mexicans packed into the renowned Monte de Piedad, an imposing centuries-old building that serves as the state pawn shop in the colonial centre of the capital. "I've pawned everything else. Since I can't afford anything to cook, I guess I can do without my pots and pans," she said as she queued. "The kids have got to get their milk."

Around her, Mexicans from most walks of life - sky-high interest rates ensure that the wealthy are simply getting wealthier - clutched television sets, hi-fis, musical instruments, paintings or boxes stacked with household goods. Some said they were there to pawn gold chains, watches, even a university graduate ring. Others turned their backs on reporters, too embarrassed to be seen.

The packed pawn shop reflected the depth of Mexico's economic crisis, which has shown no signs of improvement despite President Ernesto Zedillo's emergency austerity plan announced this month. Even a much-flaunted $50bn (£32.5bn) international loan guarantee package, spearheaded by President Bill Clinton with $20bn of US funds, may not be enough to pull Mexico out of the crisis, economists here predict. They say much of the money will go to repaying foreign debt and that more funds may be necessary.

International bankers who heard Mexico's Finance Minister, Guillermo Ortiz, explain the austerity plan in Washington last week insisted he had suggested the $50bn would not solve Mexico's problems but Mr Ortiz, on his return to Mexico, denied saying so.

Ten days after the plan was announced - including a 35 per cent rise in petrol prices, 20 per cent in electricity, a rise in VAT from 10 to 15 per cent and a 10 per cent limit on pay increases - it has failed to achieve a key objective of stabilising the peso and reversing the outflow of billions of dollars. The peso closed at more than seven to a dollar on Monday night - yesterday was a public holiday - less than half its value of three months ago.

Equally worrying to Mr Zedillo is the social unrest the crisis, and specifically the austerity plan, has unleashed. Farmers, labourers, shopkeepers, businessmen, lawyers and accountants were among thousands who marched to the Interior Ministry building in the capital on Monday to protest at soaring interest rates.

The base rate approached 90 per cent this week, with mortgage and credit rates hitting an astonishing 150 per cent, threatening the closure of hundreds of thousands of businesses, the creation of millions of new unemployed, and repossession of homes, cars and tractors.

Around 50 suicides in Mexico City this year have been attributed by relatives directly to financial problems.

The marchers said they were refusing to pay mortgages or credit card bills and called on the government to take the same tack by suspending payments on Mexico's crushing $140bn foreign debt. The group which organised the march, known as el Barzon (the Yoke), claims to have half a million members around the nation. The fact that it includes people from all walks of life - unprecedented in Mexico - has become an increasing embarrassment to Mr Zedillo, whose austerity plan has been attacked even by members of his ruling Institutional Revolutionary Party (PRI).

The President was forced to push the plan through without the traditional agreement from labour and business leaders. One day recently, there were100 separate anti-government protest marches in this capital of more than 20 million people.

The growing refusal to pay back debts is threatening to turn a banking crisis into a disaster. Three of the 18 banks privatised by former President Carlos Salinas de Gortari have recently been effectively taken over again by the state, the reverse of the trend international investors want to see. And the astronomical interest rates meant to attract foreign cash have frightened off investors because they suggest instability and have failed to stabilise the peso.

Since the vast majority of the 90 million Mexicans are poor - they live on a staple diet of tortillas, rice and beans subsidised by the government - it is the middle classes whose lifestyle is most affected by the austerity measures. French restaurants, jewellers' and clothing stores in the upmarket suburb of Polanco are deserted, but for American tourists taking advantage of the devalued peso.

"The problem now is there is no liquidity. People can't afford to use their credit cards or take bank loans," said Maru Ramirez, who runs a private primary school. "People are turning more and more to agiotistas [loan sharks] to get cash but they're having to give their house deeds, works of art or jewellery as collateral. Parents at my school are up to a year behind in their fees but I'm still teaching their children. We'll only get out of this crisis by sticking together."

As always during economic crises, the number of Mexicans attempting to cross illegally into the US is on the rise. Mexicans' most common conversation with me during the last few days has been: "Where are you from?" "Scotland." "Do I need a visa to go there? Could you help me get a job?"

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksNow available in paperback
Arts and Entertainment
Tony Hughes (James Nesbitt) after his son Olly disappeared on a family holiday in France
Arts and Entertainment
The Apprentice candidates Roisin Hogan, Solomon Akhtar, Mark Wright, Bianca Miller, Daniel Lassman
tvReview: But which contestants got the boot?
Arts and Entertainment
Jim Carrey and Jeff Daniels ride again in Dumb and Dumber To
filmReview: Dumb And Dumber To was a really stupid idea
Scunthorpe goalkeeper Sam Slocombe (left) is congratulated by winning penalty taker Miguel Llera (right)
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Direct Sales Consultants - OTE £65,000 - £100,000

£65000 - £100000 per annum: Recruitment Genius: This national direct sales com...

Recruitment Genius: Telesales Consultant - OTE £40,000

£20000 - £40000 per annum: Recruitment Genius: Can you sell? Want to earn over...

Recruitment Genius: Partitioners / Carpenter / Multi Skilled Tradesmen / Decorator

£28000 - £50000 per annum: Recruitment Genius: Various opportunities are avail...

Recruitment Genius: Trade Marketing Manager

£25000 - £30000 per annum: Recruitment Genius: This company leads the market i...

Day In a Page

Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum