Greek Hedge Manager Says Drachma Is Back as Wages Plunge

Jason Manolopoulos, author of Greece's 'Odious' Debt.

by James Pressley

Bloomberg
June 13, 2012

Jason Manolopoulos, the hedge-fund manager who wrote Greece’s ‘Odious’ Debt, has news for anyone wondering whether the country will exit the euro: The drachma has already returned.

In the run-up to national elections on June 17, New Democracy leader Antonis Samaras has painted a bleak picture of what will happen if Greece leaves: Incomes, bank deposits and property would lose at least half their value within days, he says; food prices would soar. Is that an accurate assessment?

“Greece is already going back to the drachma, partially,” Manolopoulos says. By his estimates for the private sector, “devaluation has happened to some extent. Wages are down approximately 35 percent and taxes are up. So disposable income is down 50 percent at least. Rents are down between 35 and 40 percent.”

Manolopoulos, who specializes in emerging markets at Dromeus Capital Group, argues in his book that Greece had no business joining the euro. He spoke by phone from his office overlooking green trees and a dilapidated villa in a northern suburb of Athens. What does he mean when he says the drachma is back?

Manolopoulos: The private sector is already operating in drachma territory. The government sector is not. If you look at their total spending, it’s still going up. What kind of austerity is it when your wage and pension bill is still going up?

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