There is now a fifty-fifty chance that Greece will leave the euro and get back on the drachma, leading the country to go “down the drain,” self-made billionaire George Soros said.
Soros is probably the most well-known FX trader in the world and a figure many turn to for analysis of the markets. He secured his place in the economic history books as the infamous “man who broke the bank of England” in 1992, by betting against the pound, forcing the U.K out of an exchange rate regime.
Speaking in a Bloomberg TV interview in his London home due to air today, Soros commented on the prospects of Greece breaking away from the euro zone, cross Atlantic interest divergence and the crisis in Ukraine.
Referring to the chance a country may for the first time ever abandon the common European currency, he said, “It’s now a lose-lose game and the best that can happen is actually muddling through. Greece is a long-festering problem that was mishandled from the beginning by all parties.”
The bodies trying to mitigate the crisis, the European Commission, the European Central Bank (ECB) and the International Monetary Fund, might fail in their negotiations with Greece’s far left Syriza government, which could result in a “breakdown,” Soros said.
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“You can keep on pushing it back indefinitely, making interest payments without writing down debt”, Soros said. “But in the meantime there will be no primary surplus because Greece is going down the drain.”
“Right now we are at the cusp and I can see both possibilities.”
Beyond the Greek drama, Soros also spoke about other issues he thinks the world should pay attention to. The launch of quantitative easing by the ECB at a time when the U.S. Federal Reserve contemplates raising interest rates “creates currency fluctuations,” he said.
“That probably creates some great opportunities for hedge funds but I’m no longer in that business,” the founder of the Soros Fund Management claimed.
Additionally, Hungary-born Soros said the war in eastern Ukraine between the Kiev government forces and Russian-speaking rebel militia supported by President Vladimir Putin concerned him the most.
Without more external financial assistance the “new Ukraine” will probably gradually deteriorate and “become like the old Ukraine so that the oligarchs come back and assert their power,” he said. “That fight has actually started in the last week or so.”