Concerns eased a bit over the possibility of a Greek exit from the euro zone as Saturday polls showed rising support for pro-bailout parties in that country. However, attention turned to Spain as earlier estimates of funding needed for a bailout of its largest bank looked to be seriously undervalued.
Bloomberg reported Monday that investor optimism carried over to early markets on the results of polls in Greece that showed pro-bailout party New Democracy showed a strong gain over Syriza, the anti-austerity party that had been showing strong support last week in the wake of cuts in everything from pensions and pay to health care.
Greek voters apparently were becoming increasingly concerned over the possible repercussions of a vote against austerity conditions as even International Monetary Fund (IMF) chief Christine Lagarde showed little sympathy for the country. Lagarde was quoted saying in a Guardian article that African children needed more help than Greeks who were “trying to escape tax all the time.”
She was not alone in her criticism. Juergen Fitschen, the incoming co-CEO of Deutsche Bank AG, was quoted saying in a Friday speech, “Greece is the only country, I feel, where we can say it’s a failed state, it is a corrupt state, corrupt as far as its political leadership is concerned and obviously other people had to be willing to support this.”
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Lagarde did say in Sunday comments on Facebook that she sympathized with Greece, and stressed that the wealthy must pay their fair share of taxes.
Contingency measures in other countries continued, since the next Greek election is still many days away. Home Secretary Theresa May of the U.K. said that, should the crisis escalate and result in a surge of migrants, Britain might institute emergency immigration controls.
Richard Ward, CEO of Lloyd’s of London, said that the firm had a contingency plan to switch to multicurrency settlement from euro underwriting if Greece gives up the euro in a return to the drachma.
In Switzerland, Thomas Jordan, president of the Swiss National Bank (SNB), said that a government-led panel was considering controls on capital inflows should the situation deteriorate and result in a flight to the currency.
“The working group focuses mainly on instruments to combat the franc strength based on a joint approach of the government and the central bank,” he was quoted saying in an interview Sunday with Bloomberg. “We also need to be prepared for the possibility of the currency union collapsing, even though I don’t expect it.”
Meanwhile, as Athens and its problems may have stepped back a pace, Spain edged back into the limelight as its bank problems escalated.