Tuesday, 30 August 2016
Last updated 12 min ago
May 23 2012 | 11:45am ET
At least one hedge fund doesn't think that Greece is on the verge of leaving the euro.
Toscafund Asset Management's chief economist said the firm is "sure" that Greeks will "see sense and opt for the unpleasant known rather than send Greece into an economic black hole" in next month's elections. Of course, the Greeks themselves forced that poll, widely seen as a referendum on the euro, by abandoning the country's mainstream parties for radical parties of the left and right at elections earlier this month. That vote was seen as a punishment for the center-right New Democracy party and the socialists, who negotiated Greece's tough economic bailout terms.
Savvas Savouri said a Greek exit would be "disastrous" and could lead to further social unrest, huge inflation and even a military coup—the country was led by a military junta from 1967 until 1974.
"Once Greeks vote to remain euro-ized, with all the challenges attached, the debate over the possibility of any exits will end," he wrote last week. "Greeks will in effect go from the biggest threat to the euro's future to ensuring it has one."
Savouri's confidence is somewhat borne out by recent polls, which show support for New Democracy increasing and support for two right-wing fringe parties and the Communists evaporating. Support for the Coalition of the Radical Left, or SYRIZA, a far-left anti-austerity party, has increased since the May 6 election that made it the second-largest party in the Greek parliament, however.
Savouri argued that polls should be banned in the run-up to the June 17 election to prevent further economic panic in the country. He said that if polls show weak support for pro-austerity and pro-euro parties, "one can only imagine the damage inflicted on what is left of Greek bank deposits and share prices," he said. "The bank runs we have seem will move up a gear to a stampede and the only deposits left will be dormant accounts."