Wednesday, 26 October 2011

Interview with Jason Manolopoulos

Jason Manolopoulos is a greek expert of economy, he wrote the book "Greece's odious debt" about the economic situation in Greece. He studied economics in UK (short bio) and he runs an alternative investment fund.

1) When and where were you born?

I was born in 1975 in Athens, Greece.

2) In your opinion, what went wrong in Greece?

Let us recap on how we got here in the first place. The PIGS were lent massive amounts of money by institutions during the era of Greenspan, when there was ample liquidity and low interest rates.There was pressure for free flow of capital under deregulation and free markets mantra. This capital was too great for the countries to productively absorb. (Look at how some of the National Lottery winners typically spend their windfalls – poorly). Politicians misled electorates and other institutions; either by lying on statistics, breaking the Stability & Growth Pact rules, overplaying the eurozone’s inevitability, or pursuing unsustainable fiscal policies.Investors and lenders did not conduct proper due diligence on whether these debts could be paid back. Hence there were numerous events that preceded some hedge funds taking opposing bets. Institutional investors did similar things, selling bonds and going on a buyer’s strike, for the same fundamental reasons – poor credit metrics.

3) When did you start writing the book "Greece's odious debt" ?

April 2009

4) What do you think it will be the solution for Greece and/or Eurozone? / 5) Do you think there will be a future for the Euro?

The questions we should initially focus on are: Should a low value-add production economy be lumped with a high value-add or upper-end economy? Does sufficient labour mobility exist in euroland? Do all countries have flexible product and services markets? The answer to these is no. In an ideal world, we wouldn’t start from here. Exiting the euro would be catastrophic, but staying in means many years of austerity and high unemployment, and difficult conditions in which to make essential economic and political reforms, because the exchange rate is so high relative to the productive economy. Either way, Greece has lost a huge amount of national sovereignty, because we cannot bear these huge debts without default and/or surrendering autonomy to investors or other rescuers who will be in a strong negotiating position.

Too much emphasis has been put on the currency aspect per se. A currency in itself, is no silver bullet. The UK had the British pound in the dismal 1970s and still does today, yet the country is a very different place, post Margret Thatcher’s sweeping reform. Turkey was a basket case over run by corruption in the 1990s and early 2000s, having to resort to IMF bailouts. Today post reform and its cleansing process, its economy is growing strongly and has become a strong regional player. It still has its national currency, as it did previously. Sweden and Zimbabwe have independent currencies un-pegged national currencies, with clearly widely differing economic results.

- -