U.S. crisis devastates Mexican towns


  • Photo 1 of 2

    La Cabana sells cowboy gear: belts, buckles, boots. Owner Jose Manuel de Luna's shop caters to people he calls "tourists" -- Mexican immigrants in the U.S. who are in Jerez to visit relatives who live in the town.

    - Dan Grech / Marketplace

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    La Cabana owner Jose Manuel de Luna was forced to shut down his shop because the slowdown in remittances left his customers unable to afford his wares. On the last day before his store shut down, he dumped all his merchandise on the floor for shoppers to pick through.

    - Dan Grech / Marketplace

TEXT OF STORY

Kai Ryssdal: There was a school of economic thought a year or two ago called de-coupling that was pretty popular. It was wrong, but popular. It said that even if the American economy hits the skids, the fallout for the rest of the world shouldn't be too bad because developing markets don't have to depend on the U.S. so much anymore.

All you have to do is look south of the border to see how wrong de-coupling was. Mexican migrants living here send millions of dollars back home every year. Remittances, they're called. Between the credit squeeze and the recession, immigrants in this country aren't taking home in their paychecks as they used to, which means they can't send it home.

Today our Americas Desk correspondent Dan Grech takes us to Jerez, Mexico to explore what happens when the money stops coming.


Dan Grech: A year ago, La Cabana did a brisk business in Jerez selling cowboy gear -- hats, boots, belt buckles. Tonight, the store will close its doors for the last time.

Jose Manuel de Luna owns La Cabana.

Jose Manuel de Luna through translator: Commerce in Jerez has dropped 60 percent. It's bad. Without dollars, this town is nothing. No businesses, no jobs, nothing.

The sudden drop in remittances is devastating small-town Mexico. Businesses are going bankrupt, students don't have enough money for tuition, retirees are skipping their medications. Thousands of families are being tipped into extreme poverty. Benjamin Salcido Alceta, a rancher in Jerez, says he recently had to sell some cattle to buy his children shoes. He says Mexico is in a crisis.

de Luna: En crisis Mexico. Esta en crisis. Todo Jerez esta en crisis.

The town of 40,000 is part of the Mexican state of Zacatecas. The state has the highest migration rate in Mexico. More than half of its native population lives in U.S. cities like Los Angeles and Chicago. The fallout of the U.S. financial crisis can be felt at the money transfer stations that dot nearly every town in rural Zacatecas. Armando Campos owns two dozen of these exchanges. He says remittances fell 25 percent last year and will fall even more this year.

Armando Campos through a translator: That causes a chain reaction. If a family receives less money, automatically they spend less on household goods, on clothing, on everything.

More than 150 properties in the historic district of Jerez are up for sale. Jaime Ambriz Moreno is the town's Municipal Secretary. He says this once bustling retail town is grinding to a halt.

Campos: New stores aren't opening, people aren't spending, sales are slow in existing stores. You see less economic movement.

You see less movement of every kind in Jerez. The town plaza is nearly abandoned on a Friday night. Four elderly men, their children and grandchildren now living in the U.S., quietly play dominoes.

People here say that as remittances go down, crime goes up. Housewife Marta Barrera has stopped taking her three children into town.

Marta Barrera through a translator: On Sundays, there used to be a lot of people in the streets. Not anymore. We don't feel safe. And besides, if I go out, my children will want me to buy them things. But I don't have money to spend.

It's getting dark in Jerez. La Cabana is the only store still open. Inside, owner Jose Manuel de Luna has dumped all his remaining stock onto the floor. He watches as people pick over the remains of a business he built up over a decade.

de Luna: Ten years in the trash. This business for the rest of my life, and it's over. No matter how much you fight, the numbers don't lie. You can't survive on a dream. You need to make money."

Tonight, de Luna is selling off that dream, piece by piece.

In Jerez, Mexico, I'm Dan Grech for Marketplace.

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