AltAusterity Digest #47 May 10-16, 2018

The Argentinian government has opened negotiations with the IMF for a line of credit. The previous IMF-Argentine creditor arrangement was in part responsible for the $82 billion sovereign default in 2001, leading to widespread unemployment, rising poverty, and a government-imposed freeze on bank accounts. The move comes as Argentina’s peso has by a 20% against the dollar since the beginning of the year, and inflation is projected to exceed 22%. In an attempt to help finance deficits, Argentina issued it’s first 100-year bond, with an annual yield of 7.9%. When this revenue scheme proved insufficient, Argentina confirmed that it was seeking a “stand-by” loan arrangement with the IMF, which guarantees credit will be available, so long as IMF reforms are implemented.

Over the first quarter of the year, wages in Britain rose 2.9% while the inflation rate was 2.7%. Over the same time, the unemployment rate fell to its lowest point in over 40 years at 4.2%. Despite the proclamations of success, critics have pointed out that weekly pay is still worth less than a decade ago, as real wages have still not recovered to pre-financial crisis levels. Aside from the modest gains in the labour market, GDP growth for the first quarter is estimated to only be 0.1%.

In April, the IMF announced that the global economy is more indebted than before the financial crisis. Worldwide debt currently stands at $164 trillion, equal to 225% of the global GDP. In order to understand the new record level of debt, the IMF will be compiling a database on debt dating back to the 1950s. The fund has also reinforced the austerity agenda by claiming that countries that cut budget deficits now will be best placed to cope if financial conditions take a turn.

Seattle has received backlash from big businesses after passing a controversial tax to help fund affordable housing and fight homelessness. The tax will affect an estimated 585 Seattle-based employers and aims to raise an annual revenue of about $47 million. Under the tax, large corporations such as Starbucks and Amazon will have to pay $275 a year per full-time employee over the next five years. The tax has been dubbed a “head tax” and a “tax on jobs” which may encourage large employers to hire less full-time employees.

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