Janus Fund’s Bill Gross phoned in to chat with Bloomberg Television about the Greek-Eurozone crisis today — and the legendary bond investor said the global financial situation is not as calm as markets suggest.
“It appears that we’re in the eye of the hurricane. I do not believe that this situation really is calm,” he said to hosts Erik Schatzker and Guy Johnson. “You’re seeing basically central governments throwing everything they have at the markets and keeping them calm.”
The Chinese have been propping up their stock market, while the European Central Bank is putting massive support in behind the scenes, said Gross.
Gross said he predicts a 70% to 80% chance Greece will exit the Eurozone. And that would be the best case scenario for the country.
The decision will depend on whether Germany is willing to concede that austerity “to the extent that they have enforced it in Greece, and to the extent that restructuring or debt write-offs” is a necessity, he said. And with several EU members vetting the decision, a definitive forecast will be hard to give.
“I think and I’m on the side of the Greeks here,” he said. “The Germans are being disingenuous with their portion of the debt because they have had massive restructuring of their own debt after World War I, then after World War II.”
But Germany has shown no hint of starting a “Marshall Plan” for Greece — which means European Central Bank President Mario Draghi will be Greece’s saving grace.
“I would suggest that if European Central Bank President Mario Draghi doesn’t at some point provide additional funds, and if Greece does not pay the $US3 billion, or euro dollar debt on July 20 or 21, then there is going to be significant problems within the system,” Gross said. “The $US100 billion worth of funds extended to Greek banks through the ELA, will have to be declared in default because the ECB cannot lend on defaulted collateral.”