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Take This Debt And Shove It

"The Barzonistas are coming! The Barzonistas are coming!" These are the words that strike terror in the hearts of every banker in Mexico. A mixture of grassroots organizations comprising small and medium size farmers and business people, and consumer debtors, the groups operating under the Barzonista umbrella are perhaps the most significant political development in Mexico today. (for more on the beginnings and early activities of the Debtors' movement, see this column "The Middle Class Revolt")

For a U.S. citizen, the Barzonistas recall to mind the National Farm Organization, and it's populist predecessors in the heartland; Coxey's Army and the Vietnam-war bank sit-ins. These folks are not the Mao-spouting ragged "non-students". They are the salt of the Mexican earth, and they span a broad segment of the Mexican economy. And they are mad as hell, and they say that they can't take any more.

October 31, 1995 was the last day of the "amnesty" phase of the government's restructuring scheme. The Barzonistas, along with the Civic Alliance and several unions, campaigned hard to convince folks to refuse the deal. The results of the campaign are in dispute, with the bankers claiming "victory" with a 58% to 75% signup rate, and the Barzonistas noting that the total of bad debt on bank balance sheets has soared by at least 50%.

As of November 1, debtors in Mexico are subject to "legal action" (read foreclosure) at the bank's discretion, even if they later agree to restructuring. Just say "no", say the Barzonistas. Say no to all of it, it's a scam. The deal isn't comprehensive, they say. It gives some folks a one-time reduction in the payback rate on their debt, but it fails to put into law some badly needed safeguards and codifies some practices which are outright illegal. They say that once you sign on, you lose your rights to any future redress.

The bankers say that those who do not sign on are likely to lose everything, and that the choice is between being a responsible citizen or a deadbeat. The Barzonistas say that bankers are getting richer and the people are getting are poorer.

In early October, the El Barzon National Federation, one of the two largest groups, took over the offices of the Agriculture Secretariat in Guadalajara, Jalisco. Guadalajara is the second largest city in Mexico. This action is part of a pattern of bank- and government office- occupation -- a tactic aimed at disrupting "business as usual". Business as usual, say the Barzonistas, involves illegal and immoral acts: political corruption on the part of the government resulting in misappropriation of needed government aid, usury on the part of the banks, and connivance between the two to confiscate land and property from debtors victimized by the corruption and the usury, and consolidate it in the hands of the wealthy.

Once confiscated, the land and property, often tools of production, are sold at public auction. Wherever possible, the Barzonistas have infiltrated those auctions and brought them to a halt. Recently, they announced that they would interrupt a major auction due to be held in Mexico City on November 15.

So far, arrests and harassment have been light, considering the confrontational tactics the Barzonistas employ. Law enforcement authorities are loath to break heads sitting on middle class shoulders. On the other hand, the pressure put on Mexican banks and government institutions by the IMF and the World Bank, and their friends at the large U.S. lending institutions, is enormous: pay or else. What the Barzonistas demand is little short of economic revolution and total government reform.

The struggle for survival of the middle classes in Mexico is likely to deepen. On October 31, the head of the Treasury, speaking before the finance committee of the Chamber of Deputies, announced that $20 billion new pesos had been secretly printed and put into circulation. Outraged at what appeared to be a cynical violation of a new economic recovery plan which they had signed on to only days before, the deputies of both major opposition parties staged a walkout and declared that the legislative branch of the federal government was dead.

On the same day, while speaking before his own congressional oversight committee, Secretary of the Treasury Robert Rubin declared Mexico to be on the road to recovery but still in dangerous circumstances. Meanwhile, Forbes magazine revealed secret documents from 1993 in which Rubin declared that Mexico was solidly on the slippery slope to economic collapse -- a fate that he said could not be avoided.

Reaching a new low in value (7.2 against the dollar), the peso -- which the Zedillo government pledged to continue floating -- continued its Halloween free fall, while the increased money supply and the government's announcement that it would begin to allow "moderate" increases in prices, beginning with 7% in December (let's see, isn't that a rate of 94% per year?) raised the spectre of rampant inflation. At that point, even the conservative Partido Accion Nacional (PAN) began to talk about the latest economic plan as giving to the rich and taking from the workers.

The Barzonistas? They just shook their heads sadly, said "we told you so", and planned the next action.

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