AltAusterity Digest #49 May 24-30, 2018

In a statement on Portugal’s economic health, the IMF concluded that the country’s short-term outlook was “favorable,” but that it still had strides to make to address its vulnerabilities. Despite Portugal’s successful recovery with a mild anti-austerity agenda, the IMF recommended several reforms aimed towards fiscal consolidation, removing structural rigidities, and support for the supply side of the economy. Areas for targeted reform included containing the growth of the government wage bill and pension spending.

Athens has yet again become the scene of protest as the government’s ongoing austerity measures have led to a nationwide strike. The 24-hour strike has shut down most public transportation, grounded several flights and closed offices and schools throughout the capital. Greece is now facing its ninth year of economic crisis. Despite several bailout packages and a host of austerity reforms the unemployment rate sits above 20% and youth unemployment is above 45%. The failure of the Syriza government to deliver on it’s anti-austerity agenda has resulted in a fracturing of the electorate, ranging from the far-right to far-left.

The political crisis in Italy, precipitated by an abandonment of attempts to form a coalition government, has spilled over into a potential financial crisis. The strengthening of Eurosceptic parties in Italy has led to upheaval in the world financial markets. A massive sell-off in Italian bonds brought down share prices of European banks exposed to Italian government debt. Bond prices – which affect the cost of borrowing for government – suffered their biggest one day jump in 26 years, in a climate where Italy’s debt stands at 130% of its GDP, and its monetary policy is not controlled domestically.

The Liberal government of Canada has announced it will be buying the Trans Mountain pipeline and all related infrastructure for $4.5 billion. The move has been criticized widely from rival political parties, environmental advocates, and Indigenous groups and supported by Canada’s Building Trades Union and the Canadian Chamber of Commerce. According to a document from the National Energy Board, the Texas-based energy company Kinder-Morgan bought the pipeline in 2007 for $550 million – a wide gap from the $4.5 billion the company will receive.

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