In a special web episode of Wall Street Week run on Monday, Marathon Asset Management CEO Bruce Richards made a pretty grim prediction for Greece’s embattled government:
“Thirty days from now, Syriza party — which is Alexis Tsipras, who is the prime minister — probably won’t be in office,” Richards said.
“He’s taken the country to a point, a brink, where, hopefully there is a point of return in terms of its economy turning around, but it’s getting very dire.”
On Sunday, just as Greek officials appeared to approach a deal with European creditors for a new and much-needed $US7.9 billion bailout package, Prime Minister Tsipras shocked the country — and the world — by calling a referendum on the bailout.
Richards predicted that, in a matter of weeks, supermarkets would start running out of food and gas stations would run out of gas.
“It shows his ineffectiveness — his inability to work on a deal,” Richards said of Tsipras.
He went on to predict two potential scenarios for Greece:
- Tsipras could resign (Richards said the probably of this is very low — around 10%)
- The Greek people will vote “Yes” to the current deal proposal and Tsipras will go “crawling back” to authorities and take the deal
Richards thinks the second scenario is more likely. And, he said, it would effectively be a vote against Tsipras and Syriza.
“I think the Greek population realises now that they have elected the wrong party and they have elected the wrong prime minister,” he said.
“Greek people are smart, they’re good business people, and they’re going to vote for the most sane economic program for Greece, which is to stay in the Euro.”
As for the wider implications of a Greek default on the global economy, Richards said that European banks are strong, and few have exposure to Greece now.
The institutions that do have exposure to Greece — the “Troika” of creditors — are comprised of government and international institutions, and will probably be able to absorb the impact of a default, he said.
So, he said, “It will not be a Lehman-like event.”
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