On Sunday, October 4th, Portugal had national elections. Seventeen parties entered the fight. Following the social crisis outcry, expectations and predictions reflected the general sentiment that the Socialists would be the next winners. How can we explain, then, that the voters rewarded the parties (PSD and CDS) that had made their lives so miserable with austerity measures?
By Clément Fontan
One month ago, the Bruegel institute, a respected and influential EU think-thank, published an opinion piece by former IMF staff member Ashoka Mody. In his excellent analysis, Mody relies on leaked insider information and IMF self-criticism to condemn the Fund’s role in the Greek bailout process from 2010 to the present. In short, he reminds us that the lack of debt restructuring during the 2010 bailout was primarily aimed at protecting the holders of Greek bonds, e.g. the major French and German banks, despite its unsustainability. Then, he underlines that the structural reforms and the budget cuts worsened the economic and social conditions in Greece to such an extent that a second bailout was needed in 2012.