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Mexico City.

At this moment, more than twenty high-ranking Mexican government officials are gathered in a luxurious small conference room inside the presidential palace.

However, their expressions were not very good.

This includes the president, ministers, the central bank governor, and key officials of the Ministry of Finance.

The atmosphere in the meeting room was so heavy it was almost suffocating.

The president sat in the main seat, his brows furrowed, his gaze sweeping over everyone present.

He was dressed in an impeccable suit, but anyone could see that the once spirited president was now etched with fatigue and anxiety.

"Salinas, tell me, how much longer can we hold out?" the president asked.

Finance Minister Carlos Salinas took a deep breath, stood up, and walked to the projector.

He pressed a button, and the screen on the wall lit up, displaying a series of alarming numbers.

“Mr. President, colleagues,” Salinas said, his voice trembling slightly, “this is our latest foreign debt data. By August 12, which is three days from now, we have a short-term foreign debt of $8 billion that will be due.”

This is just the beginning. By the end of the year, a total of $862 billion in debt will mature, with interest alone amounting to $158 billion.

A collective gasp filled the conference room.

$268 billion in debt will mature in three days; $862 billion in debt will mature by the end of the year!
It's already August, and there are only three months left until the end of the year.

It's worth noting that Mexico's GDP in 1982 was only around 180 billion US dollars.

This means that Mexico's debt already accounts for nearly half of its annual GDP.

This only includes government debt, not corporate and private debt.

The government's annual fiscal revenue, at most, is only a little over 30 billion US dollars.

This means that even if all fiscal revenue were used to pay off the debt, it would still be far from enough.

Moreover, the government still needs to operate, pay salaries, and maintain basic public services.

Salinas continued playing the next slide.

“Our foreign exchange reserves are currently less than five billion US dollars. If we use this money to pay off debts that are about to come due, then we will have no funds to maintain the stability of the peso exchange rate and will be unable to cope with the possible panic capital outflows.”

“What’s worse,” he paused, his voice growing heavier, “we’ve already used up most of the three billion dollars in loans from the International Monetary Fund.”

The remaining money wasn't even enough to cover the interest payments.

Central Bank Governor Gutierrez stood up and added, "We had previously used various means to stabilize the market, but now all those means have been exhausted."

The peso's exchange rate appears stable, but it is actually at its limit. If news of a debt default breaks, the peso could collapse within a day.

“Didn’t those people on Wall Street say our situation had stabilized?” a minister couldn’t help but ask. “Hasn’t market confidence been restored?”

Salinas said with a wry smile, "That was an illusion we created. We used our last reserves to stabilize the peso exchange rate, used various means to maintain a false prosperity in the stock market, and even spent money to hire some Wall Street analysts to speak well of us, but all of this was only temporary."

He paused, his voice growing heavier: "It's like someone with a serious illness. We use painkillers to temporarily relieve their pain, but that doesn't cure the illness. Once the effects wear off, the pain will come back even stronger."

The president paused for a few seconds, then slowly asked, "Can we borrow more from the International Monetary Fund?"

Salinas shook his head: "It's impossible. They've made it clear that they won't provide any new loans until we undertake structural reforms, and structural reforms take time, which is exactly what we lack most."

"What about the United States? Will they intervene?"

“We have contacted the U.S. Treasury Department, and their attitude is very clear: they can help us coordinate debt restructuring, but they will not provide new funds.”

In their words, this is a market problem and should be solved by the market.

The conference room fell into a deathly silence once again.

Everyone understands what "market solution" means.

This means a breach of contract.

This means a debt crisis has broken out.

This means the peso is collapsing.

This means the economy is in deep trouble.

The president closed his eyes and leaned back in his chair.

He recalled his high spirits when he first took office five years ago, the wonderful promises about "oil prosperity," and his vow in a speech to bring Mexico into the ranks of developed countries.

"Is there no other way?" the president asked, unwilling to give up.

Central Bank Governor Gutierrez said with a wry smile, "Mr. President, there is only one solution before us now!"

"What method?" The eyes of the other ministers, including the president, all turned to the central bank governor, Gutierrez.

"Default, now we have no choice but to declare default. Our debt is far too high, and our fiscal revenue is far too low!"

They simply cannot support such a massive debt; they have no choice but to default.

Gutierrez's words were like a bucket of cold water poured over everyone's heads.

Although everyone knew the answer in their hearts, it still sent a chill down one's spine when it was officially spoken.

The president's face paled further as he continued, "And then what? What will we face?"

Gutierrez sighed and began to explain in detail.

“If we declare default, firstly, international credit rating agencies will immediately downgrade our sovereign credit rating, possibly directly to ‘default level,’ which means we will be unable to issue new debt in the international market for a long time.”

"Secondly, investors who hold our bonds will frantically sell, causing bond prices to plummet and further exacerbating market panic."

"Third, the peso will depreciate sharply, inflation will rise rapidly, people's purchasing power will decline rapidly, and social unrest may follow."

"Fourth, foreign capital will withdraw on a large scale, our banking system may face the risk of bank runs, a large number of enterprises will go bankrupt, and the unemployment rate will soar."

With each word he spoke, the atmosphere in the meeting room grew heavier.

After hearing this, the president seemed to age ten years in an instant.

Over the past decade or two, Mexico has developed rapidly, and its urbanization, industrial structure, and proportion of middle class have all approached the level of developed countries.

The GDP growth rate has even been dubbed the "Mexican Miracle"!
With its oil reserves ranking fourth in the business world and its production ranking first in Latin America, Mexico has seen immense wealth.

Many international media outlets and even financial experts consider Mexico to be a "quasi-developed country".

Therefore, this president was full of vigor and ambition when he took office.

Standing in front of the Capitol Building, he delivered his inaugural address to hundreds of thousands of people, making a bold promise: "We will lead Mexico into the ranks of developed countries! We will ensure that every Mexican can live a decent life!"

The audience erupted in thunderous applause and cheers.

At that time, he thought he could really make history.

But now?

He became the first president in Mexican history to face a sovereign debt default.

He personally led a "near-developed country" to the brink of collapse.

The president closed his eyes, took a deep breath, and asked again, "Gutierrez, I understand what you're saying, but I want to know, after defaulting, is there any chance for us to recover?"

Gutierrez paused for a few seconds, then said, "Yes, but it's difficult."

"Go on."

"First, we need to come up with a convincing debt restructuring plan as soon as possible to show the international community our sincerity and determination. This means that we must accept the supervision of the International Monetary Fund and carry out a series of painful structural reforms, such as cutting public spending, deregulating exchange rate controls, and privatizing state-owned enterprises."

"Secondly, we need to win the support of the international community, especially the United States. If they are willing to help us coordinate debt restructuring, our situation will be much better."

"Third, once a default is announced, capital outflow is inevitable, so we must stabilize public confidence as soon as possible to prevent social unrest."

"Fourth, in the next few years, we need to take steady steps to gradually restore the economy. This process may take five, ten, or even longer."

After Gutierrez finished speaking, a long silence fell over the conference room.

Five years, ten years.

For a country, this may not be too long.

But for a president, this is his entire political career.

Five years later, he had already stepped down; ten years later, he may have been forgotten by the public.

But he will have to bear the historical infamy of "leading Mexico toward collapse".

Unfortunately, they didn't expect oil prices to drop so quickly this year.

In recent years, in order to accelerate Mexico's economic development and enable Mexico to join the ranks of developed countries as soon as possible, they have borrowed too much foreign debt.

Most of these foreign debts are secured by future oil revenues.

They thought that oil prices would keep rising.

They believed that as long as there was oil, Mexico would never lack money.

But they were wrong.

International oil prices have plummeted since last year, leading to a sharp decline in Mexico's oil revenues, while its oil-backed debts remain in full force and effect. This is a fatal mistake.

A mistake that could bring down a country.

Finance Minister Carlos Salinas then spoke up, saying, "Mr. President, we have no other choice!"

The president closed his eyes and took a deep breath.

He knew perfectly well what kind of changes would occur in Mexico's economy once the Mexican government announced its default.

The peso plummeted, inflation soared, businesses collapsed, unemployment surged, people's living standards declined sharply, and social unrest ensued...

He could foresee all of this.

But he had no other choice.

It's like a person standing on the edge of a cliff, with a bottomless abyss behind them and a raging fire in front of them.

If you jump, you might die; if you don't jump, you will definitely die.

The president opened his eyes and looked at everyone in the conference room.

Those who had been with him for five years all had their heads down, and no one dared to look him in the eye.

Because they all knew that this decision would change the fate of the country.

To change the destiny of every Mexican.

His term will end in a little over three months.

Upon taking office, the president believed he would lead Mexico to become a developed country and become one of the greatest presidents in Mexican history.

But now, he is about to become the first president in Mexican history to declare a sovereign debt default.

Fate is truly ironic.

The president gave a wry smile, then slowly stood up.

“Gentlemen,” his voice was low and hoarse, “I know this decision is difficult, but we have no other choice.”

He paused, his gaze sweeping over everyone present, and continued, "Three days from now, I will deliver a televised address to the nation, announcing that Mexico is temporarily unable to repay its maturing foreign debt."

At the same time, we will initiate debt restructuring procedures and begin negotiations with the International Monetary Fund and creditor banks. Everyone should be prepared for the possibility of declaring default.

The conference room was deathly silent.

No one speaks.

No one dared to speak.

Because they all know what kind of chain reaction this decision will trigger once it is announced.

The president continued, "Gutierrez, the central bank needs to be prepared to deal with the shock. We need to have contingency plans in case the market collapses. The peso exchange rate, the banking system, and foreign exchange reserves—nothing can go wrong."

Gutierrez nodded and replied, "Understood, Mr. President. We will do our best to stabilize the situation."

The president glanced around at the crowd one last time and continued, “Ladies and gentlemen, the days ahead will be difficult, but I want you to remember that we are the leaders of Mexico, the backbone of this country, and no matter what happens, we must hold on.”

He took a deep breath.

"Meeting adjourned."

The crowd silently rose and filed out.

The president was the only one left in the conference room.

He walked to the window and looked out at Mexico City.

The sun was shining brightly, and people were coming and going on the streets; everything seemed so normal.

But he knew that this city, this country, was about to face an unprecedented storm.

……

Time flies, and August 12th has arrived in the blink of an eye.

For most people, this day is just an ordinary day, a day to go to work or school as usual.

But for Mexico, this day is destined to be recorded in history.

At 9:00 a.m. sharp, a gentle knock was heard on the door of the president's office inside the presidential palace in Mexico City.

"Come in."

Salinas pushed open the door and entered, his face bearing an indescribable complex expression.

"Mr. President, everything is ready. You will be addressing the nation on television in ten minutes."

The president nodded and slowly stood up.

He walked to the mirror, straightened his tie, and smoothed out the wrinkles on his suit.

The person in the mirror looks more than ten years older than they did five years ago.

Those eyes, once full of confidence and brilliance, are now filled only with weariness and helplessness.

“Salinas,” he suddenly spoke, “what do you think history will say about me?”

Salinas paused for a few seconds, then said, “Mr. President, history will remember that you did not shirk or shirk responsibility during the nation’s most difficult time, but bravely took on the responsibility.”

The president gave a wry smile.

"Brave? Maybe, but I would prefer history to remember me for leading Mexico to prosperity, not for leading it to collapse."

He turned and looked out the window.

A large number of people have already gathered in the square.

They were unaware of what was about to happen; they simply passed by, stopped, and left as usual.

In a few minutes, they will know that their country is about to enter a new and difficult era.

“Let’s go,” the president said.

The two walked out of the office, through the long corridor, and came to a closed door.

Behind the door is the press conference room.

The place was already packed with journalists from all over the world.

The president took a deep breath and pushed open the door.

The flashes went off instantly, and the clicking of cameras echoed incessantly.

Reporters rushed to raise their cameras, eager to capture every expression on the face of the president who was about to announce a historic decision.

The president walked to the front of the podium and stood still.

He looked at the sea of ​​people below the stage, at the cameras and microphones, and at the expectant, curious, and nervous eyes.

He cleared his throat and slowly began to speak: "Fellow countrymen and fellow journalists, today I stand here to announce a difficult decision to the whole nation and the world."

His voice was deep and hoarse, but in the quiet press conference room, every word was clearly audible.

"After careful consideration and full discussion with cabinet members, I have to announce that Mexico is temporarily unable to repay its $268 billion in foreign debt that is due to mature."

The audience erupted in chaos.

Reporters raised their hands, eager to ask questions.

But the president didn't give them a chance. He continued, "This was not an easy decision. We tried everything we could and sought every possible help, but the reality is harsh, and we had no other choice."

“Starting today, we will initiate debt restructuring procedures and begin negotiations with the International Monetary Fund, the U.S. Treasury, and all creditor banks. We pledge to seek a fair and reasonable solution with the utmost sincerity and determination to protect the legitimate rights and interests of all creditors.”

"At the same time, I would also like to say a few words to all the Mexican people."

His gaze softened.

"I know that the days ahead will be tough. The peso will depreciate, prices will rise, and jobs will be harder to find. But I urge you not to panic or despair. Mexico will not collapse. We will get through this."

"We have abundant resources, hardworking people, and firm beliefs. As long as we are united, there is no difficulty that we cannot overcome."

He paused, his voice becoming even more resolute.

"Finally, I would like to thank everyone who has supported us during this difficult time, especially Mr. Lin Haoran from Hong Kong, who will be visiting our country soon and plans to increase his investment in Mexico in the coming years."

His trust gave us confidence and strength, and I hope that more entrepreneurs like Mr. Lin Haoran will remain optimistic about Mexico's future.

After he finished speaking, he bowed deeply.

Then, he turned and left.

Behind me, the flashes continued to go off wildly, and the sound of camera shutters clicking incessantly.

But the president did not turn back.

He knew that from this moment on, a new chapter had been turned in Mexican history. (End of Chapter)