Jan 8, 2018
Sixteen years ago, real estate developers, backed by the Mexican government, launched the largest residential construction boom in Latin American history. An estimated 20 million working class people bought and moved into the houses and the infrastructure built by these developers.
Today, this real estate boom, very akin to what happened in the U.S. before the Great Recession, is in shambles. First, these developers downsized homes – building about one million one-bedroom units as small as 325 square feet. Then, the shoddy infrastructure collapsed and the equally shoddy homes became unlivable. “Gutters run with raw sewage from burst pipes. Streets sink, sidewalks crumble, and broken-down water treatment plants rust. In some developments, blackouts hit for days at a time. Homeowners toting buckets scrounge for water delivered by trucks. Inside many homes, roofs leak, walls crack and electrical systems short-circuit, blowing out appliances and in some cases sparking fires that send families fleeing,” according to the Los Angeles Times.
These developers saddled the working people with high mortgage payments, which increased over time since they were tied to the inflation index and typically reached about 25% of a worker’s wages, economically devastating them and, like in the U.S., causing defaults on a massive scale.
These homeowners got organized and protested against the developers’ fraud. They blocked the roads and sued the developers. But, instead of addressing the house owners’ valid grievances, the police attacked the protesters and the government officials pursued cases against activists. In one case, the government has imprisoned the country’s most prominent protest leader for two years without trial on an invented charge of armed robbery.
The scale of this abject rip-off reached more than 100 billion dollars. Big global investors, the World Bank, Wall Street investment banks, General Motors Investment Corp., university endowments, foundations and U.S. pension funds joined this bonanza. Already filthy rich people got richer, as a result.
This is the same mortgage rip-off we experienced in the U.S. The same investment firms are responsible for this scheme. The same people, backed by the same governments, got richer. The same capitalism ruined working people – in the U.S., in Mexico.