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Meet the 300 Billion Euro Man
Friday morning, I met up with Petros Christodoulou, the man Spiegel
International dubbed "Greece's savior" in an article which appeared in
late March, The 300 Billion Euro Man:
When Petros
Christodoulou sits at his desk, his gaze inevitably falls on a relic of
better days. To him, it must feel like a reminder of a laudable
achievement gone wrong -- and a warning. A neatly framed certificate
perched on the windowsill across the room reads: "Best Government
Borrower." It was an award bestowed upon the Athens government in 2007
by the British financial newspaper EuroWeek.
Back then, taking on debt in Athens was more of a straightforward
affair. These days, though, the entire world is looking to Greece and
wondering how the country will clean up its budget and avoid a national
bankruptcy.
Even if Greece is unable to increase its revenues
significantly, it is Christodoulou's job to procure favorable loans in
the financial markets so that Athens can at least pay off its old debts
with new debt. This, in turn, is meant to placate Greece's creditors,
help the country get over its financial crisis and stabilize Europe's
common currency, the euro.
Just one month ago, Prime Minister
Georgios Papandreou, 57, appointed the former investment banker to
serve as Greece's highest-ranking debt manager, as general director of
the Public Debt Management Agency (PDMA). It is a dubious honor, given
that the country owes €300 billion ($404 billion) and is paying
interest rates on government bonds that are up to 3 percent higher than
the rates paid by Germany. His predecessor issued an €8 billion bond
offering in January, but the price began plunging on the first day of
trading. It was a debacle for Greece.
'Admittedly Difficult Situation'
Nevertheless,
Christodoulou didn't hesitate for a second. "You don't necessarily
wait for an offer like this," says the financial manager, "but there
are moments in your career when you just have to clench your teeth and
get down to business." Now he intends to use his skills to help lead
his country "out of an admittedly difficult situation."
Those
skills must be extraordinary, if one is to believe the early praise in
the capital. Christodoulou, who studied finance in Athens and at New
York's Columbia University, held senior executive positions with
several major financial institutions, including Credit Suisse, Goldman
Sachs, JP Morgan and, most recently, the National Bank of Greece, before
being chosen as his country's financial savior. "I climbed high and
was dropped off with a parachute over unknown terrain," he says.
The
PDMA's "front office," as Christodoulou calls it, doesn't exactly look
like the nerve center of a campaign to prepare for the final battle
against looming bankruptcy. The hallway, painted in Greece's national
colors of blue and white, is quiet. The desks seem oddly neat and many
chairs are empty.
With his staff of 20, Christodoulou, 49, must
decide which bonds to place and where they will be placed, the size of
the offering and the terms and conditions. "My life is dictated by the
financial markets," he says. "I'm here when something new happens, and
I'm here when someone has an idea, morning, noon and night. I exchange
e-mails with the finance minister at one in the morning."
Not a Time for Weakness
His
carefully ironed white shirt belies his busy schedule as he sits at
his desk in shirtsleeves. Given all of his newfound responsibility,
does he have trouble sleeping? Christodoulou, usually quick to respond,
pauses for a few moments. Then he says, absent-mindedly: "I believe
it's doable, and that's why I'm here. There is no room for emotion."
His
biggest challenge at the moment is to raise about €11 billion by the
end of May to pay debts that will mature by then. At the beginning of
the week, that number was much higher, but a successful bond issue on
Monday brought in a much-needed €5 billion. The offering follows an
equally successful bond issue on March 3, which likewise brought in €5
billion. Nevertheless, by the end of the year, he must rustle up over
€20 billion more.
In April, he and his team will embark on a
"road show" in the United States and Asia. "We have a story to tell,"
he says. The story is about a Greece that will successfully complete
its difficult journey and will then offer good investment opportunities
-- opportunities, he says, that international investors cannot afford
to ignore. In fact, says Christodoulou, Greece is already paying such
attractive yields to offset a higher risk that no international
investor can "afford not to be in on the deal." He is targeting the
booming financial centers in Southeast Asia and in emerging economies,
in particular.
Going for the Jugular
Christodoulou makes decisions quickly and purposefully. He thinks
patriotically and acts globally. "We all need luck," he says, and adds:
"I also go to church." He pauses and laughs again: "I need all the
strength I can get."
The US business magazine Forbes estimates
that he earned an annual salary of about €300,000 in his last bank
job, but his current pay is likely considerably lower. "I don't
remember," he says, smiling thinly -- no comment, in other words.Instead,
he prefers to emphasize the selfless nature of his current task. "One
thing is certain," he says. "I'm not a politician, and I'm not planning
a political career."
Mr. Christodoulou is
definetely not a politician. From the moment I walked into his office, I
could tell he's a market guy, fixated on his Bloomberg screen, looking
at bond spreads. He reminded me of the many European hedge fund managers
I used to meet when I worked at the Caisse allocating money. Smart,
very polished, excellent conversationalist (fluent in English), and a
bit arrogant, which comes with the territory (in Greece you have to be
arrogant when you reach a certain status or else people don't respect
you, but I found him very friendly and we chatted for nearly an hour and
a half).
I had sent him a few questions from large pension funds
and made it clear that I'm not working for them or representing them,
nor are they particularly keen on investing in Greek bonds. They just
wanted to know how Greece is coping with austerity measures and how they
will service their debt going forward.
Mr. Christodoulou told
me, "I don't respond to bloggers, and I don't normally meet them" but
he was kind enough to meet me and we exchanged information. The first
thing he did was jot down on a piece of paper the rough breakdown
Greece's debt: 70 billion euros is held internally, 70 billion by
France, 50 billion by Germany, 40 billion by the ECB and 50 billion
Other Eurozone nations.
"The bulk of our debt is held
within Europe which is why I focus much of my attention here", adding
"we have to first service those who invested in our debt." Of course,
that's understandable, as Europe stands to lose the most if Greece
defaults or restructures its debt.
On the "R" word, Mr.
Christodoulou made it clear that restructuring is not an option. "It's
not just me saying it, our Prime Minister, Finance Minister, Trichet and
others have said it". I told him the ripple effects would be too big.
He agreed, stating "You can't just look at Greece on its own. There is
too much at stake for European and international capital markets if
Greece restructures. The cost of restructuring is unbearable".
On the austerity measures, I told him many market analysts are skeptical
that Greece can come out of this mess. He handed me a WSJ article, Why Sovereign Debt Default Remains on the Table,
and told me that Greece just underwent "shock treatment with a capital
S". He added: "you know well that Greeks have to be lying on the floor
before they accept drastic changes". I know that all too well,
remembering the criticism Greece received prior to the 2004 Olympic
games, which in the end, turned out to be one of the best Olympics ever
(post-Olympics, however, things soured as they didn't have a plan on how
to use the buildings they built).
I asked him specific questions on why Greece wasn't
paying the VAT tax credit to foreign investors and why they're not going
after tax evaders more forcibly. "We are going after tax evaders and
accelerating pending court cases. There is no choice. If we don't raise
tax revenues in the next four months, we can't cut more costs as patience is
wearing thin among Greeks." On the VAT tax credit, he told me "when
you're cash strapped, you have to make difficult decisions, and that is
unfortunate, but we're working to rectify this as soon as possible."
We
also chatted about his experience. Interestingly, Mr. Christodoulou
knew a lot about Canada and lived in Toronto and Montreal. After
graduating with an MBA from Columbia, he worked at the treasury
department at Fednav Group,
and in Toronto, he spent a couple of years trading provincial debt at
Goldman Sachs. "But the winters were too cold, so I left Canada and went
over to London to work at JP Morgan as a bond trader where I stayed 12
years before moving back to Athens."
(Interestingly, when
discussing blogs and bloggers, he became irate over those who accuse
him of being a "Goldman puppet", calling them "dumb <expletive>",
and told me "who would you rather have running this agency some Greek
pension manager who doesn't know the first thing about capital markets?"
Good point, most of those guys are political hacks who are completely
incompetent and totally corrupt.)
Amazingly,
he recalled exactly where he lived in Montreal, "on the corner of Guy
and Sherbrooke" and when I told him one of my favorite Greek
restaurants, Molivos, was there, he said "yes, it's on the south west corner". Pretty good memory.
He also told me his cousin, a social worker, lives in Montreal, and his uncle, John Christodoulou is the Chairman and CEO of Guardian Capital Group
in Toronto (I knew the name rang a bell as his uncle is one of the most
successful Greek Canadian businessmen). "My uncle has been trying to
bring me back to Canada", he joked.
We ended our conversation by talking about Greek "diaspora" bonds
which are bonds they are going to issue to Greeks living abroad. He told
me they're thinking of issuing 1-year and 3-year paper, and asked me
where 10-year bonds were trading in Canada. My brain was fried from my
vacation, so I couldn't tell him exactly off the top of my head, but he
checked his Bloomberg and told me 3%.
(I am not sure how
successful Greek diaspora bonds will be given that many Greeks in Canada
and elsewhere got burned in the Greek stock market bubble back in 1999
and are generally weary of Greek investments. But if they can get extra
yield on relatively safe government paper, I think many will consider
it, and not just out of patriotism to the Motherland).
As I left his office, he told me that he invites my readers to go directly to the Greek Public Debt Management Agency
website where they can view the latest presentations. He also told me he will
be planning a North America roadshow at a later date and is happy to
respond to any questions from fund managers directly (just send them to
pdma@pdma.gr).
I would like to thank Mr. Christodoulou for taking
the time to meet me and share his thoughts on the Greek economy. Along
with the Prime Minister and Finance Minister, he's got one of the
toughest jobs in Greece, but he's more than qualified to handle the
challenges that lie ahead.
Finally, Greece’s Prime Minister George Papandreou recently spoke with Bloomberg's Betty
Liu about the country's economy and sovereign debt crisis.
Papandreou says Greece ruled out any plans to restructure debt and
repeated that the country plans to return international capital markets
as soon as possible.
»
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Did not notice any Greek Orthodox icons on his office wall---probably the church is only savior to debt crisis by melting down all the gold crowns,and other paraphanalia, or just praying and lighting candles.
"From the moment I walked into his office, I could tell he's a market guy, fixated on his Bloomberg screen, looking at bond spreads. He reminded me of the many European hedge fund managers I used to meet when I worked at the Caisse allocating money."
Safe to say we can stick a fork in Greece...
The first thing he did was jot down on a piece of paper the rough breakdown Greece's debt: 70 billion euros is held internally, 70 billion by France, 50 billion by Germany, 40 billion by the ECB and 50 billion Other Eurozone nations.
Leo, you should have then asked him: How much of France's debt does Germany hold; how much of Germany's debt does France hold; how much of Spain's debt does Portugal own; and so own.... BASICALLY, is this just one collective "reach around"?
Is it just me or does he look vaguely like a Greek Lloyd Blankfein?
No one wants to admit that the massive accumulated debts cannot possibly be paid. Least of all the Greeks, but they have the dubious distinction of being among the first. First was Iceland, second could be Ireland, Portugal, or Greece.
Really sorry , Bearster. I do know better than to blog when I'm that stressed. Right or wrong, you contributed, I didn't. I value the variety of opinions and debates here on ZH, yours included.
If you look at the chart of the 10yr GGB, pretty much anyone who didn't buy on May 7th and sell within a window of a couple of weeks has taken a big green warty one up the chute. Those European banks have had months and months to get clear of these positions. If they haven't done it by now, whatever happens to them is their own fault.
The belief system I always hear out of these financial types is baffling. They universally seem to treat this as an acute issue of liquidity and confidence, rather than a structural problem of demographics and solvency.
All that said, he can believe whatever claptrap he wants, as long as US taxpayers via the IMF are not involved in any way with the poor investment decisions of European banks.
Geez S Christodoulous
http://ftalphaville.ft.com/blog/2010/02/19/154246/meet-petros-christodou...
http://www.businessweek.com/news/2010-02-16/goldman-sachs-greece-didn-t-...
http://www.zerohedge.com/article/head-greek-debt-office-replaced-former-...
For such are false apostles, deceitful workers, transforming themselves into the apostles of Christ. 14And no marvel; for Satan himself is transformed into an angel of light. 15Therefore it is no great thing if his ministers also be transformed as the ministers of righteousness; whose end shall be according to their works.
http://kingjbible.com/2_corinthians/11.htm
More of God's work, huh? Good luck with that
(God, I love quoting the Bible...not from a religious perspective mind you, more from a "Pulp Fiction" this shit is really freaky kind of vibe)
Leo ;
Did you ask him whether he is reading ZH or Not ?
Nice interview and nice of Mr. Christodoulou to take time to speak with you and us as an extension. Ultimately, it would be naive however, to believe that the outcome lies in the hands of Mr. Christodoulou or Mr. Papandreou.
I think of them as the pilot and co-pilot. Yes they are in command of the plane and they get to make all the nice little announcements over the PA system (talk to media), but Air Traffic Control tells them where to go.
Leo, can you please arrange an interview with Air Traffic Control? Thanks man.
This just in: Air Traffic Control has reported that Air Greece Flight DCLXVI has disappeared from radar...2 parachutes, however, have been detected...film @ 11
Also, another long article with no mention of Greece's terrible demographics--wonder why?
Summary: Terrific guy, impossible task, at least if we believe "no restructuring".
Lets see, marx wants this, or keynes wants that since mises warned of both. Give the guy a chance and see what the Consumer decides since that seals the fate of currency anyway does it not? Wish the guy the best since he needs it.
I just need to know when to dump my Olive and Goat Meat position. I tried shorting yachts and add a third long leg to my spread with Ouzo, but I'm still in the red.
Sudden Debt, help me out here!
Lost me after "Friday Morning"...
Great article. Nice desk. Thanks for the post. I imagine in these tasks there's always a little "mission creep" as he starts speaking of taxation issues as though he has any control over that. Right guy but "what's the job again"? Just keep raising debt so the country doesn't fail? I mean "the water is still pouring out at the bottom of the spout, too." What do the mathemticians call it? "Fluid Dynamics"?
The saviour of Greece !!!!!
Wow, Leo, I guess pushing Greece into a Depression, impoverishing it's middle class, selling it's natural assets at fire sale prices and causing another exodus wave of it's citizens out of their mother land looking for a future makes you a "saviour" now days.
These people are traitors, Leo, not saviours, when are you going to wake the fuck up?
The NWO puppet politicans brought Greece this mess and now offer solutions!
Same here, the illegal Federal Reserve (sic) robbed Americans and now offers to throw a penny back, after grabbing more power.
Illumaniti runs Greece and no problems will be solved until the illuminati are taken care of al la France awhile back.
And how is Federal Reserve, created by an act of US Congress and signed into law by US President, illegal?
Be a man and admit that your nation more or less willfully - and entirely legally - accepted this servitude.
Let me ask you, taraxias, what would you do if you were in their shoes? Easy to be a Monday morning quarterback...much harder to face the music and implement long-term reforms. And note, the only saviors of Greece at this stage are Greeks themselves. It's ridiculous to think one person can save Greece.
Or they could just stop paying the bonds. A simple solution, no need for a thousand experts and highly paid advisors. But I guess the debt pusher intermediaries would not earn their "fair" share of the cash flow. So in a sense yeah, Mr Christodoulou is a savior, but the question is - who is the saved here?
Yes, Leo they should just default. Why should the US/German/Irish/Etc. taxpayers bail them out? What happens in 3 years when the bailout ends with debts at 150% of GDP?
The trouble with all of you finance/markets guys is that you think the current system actually works. And if it's off, it's just by a little bit and just needs some time/tweaking. You look at the economy as weekly freight car loadings, comp same store sales, etc. You don't see the 44 million US food stamp recipients, the millions of homes in foreclosure, the tuition-debt slaves, the structural pension/retirement tsunami, the muni deficits, the infrastructure deterioration. The government taking over entire industries (student loans, cars, etc.) with the stroke of a pen, etc., etc.
The system doesn't work for the majority. It just works for the few. That's not a system worth saving. Default, reset, and fight for a free system...
It's not a question of "the System". It's pure strategy. The result of outright default would be similar to a lenghty austerity program, just compressed to a quarter or two. Then a clean slate with reduced debt. Just do as Argentina did - the pain was short, don't be a pack of pussies and think that time will sort things out because it won't, you'll pay for it one way or the other. And as I said earlier, outright default skips all the shady intermediaries that are guaranteed to entrench themselves for decades (just take a look how a Soros-driven economy restructuring of early 1990's looked like in Poland).
"...the only saviors of Greece at this stage are Greeks themselves."
Oh, yeah. Suddenly we're all in it together...socialize the losses.
30 years ago a plumber 1st told me "Shit flows downhill". I had no idea then how broadly apt is that observation...particularly applicable to all levels of management .
As elsewhere, blaming "the Greeks"" is a misdirector and useless generalization. A better target is most always the mis-leadership.
To wit, attention goes to Ourbommber .
"It's ridiculous to think one person can save Greece."
There's only one man big enough for this job. We must ask Bono to start a "Greek debt forgiveness" campaign.