Cofounder, PIMCO
Bill Gross: Germans Disingenuous Over Greek Debt
July 6 -- Janus Capital Fund Manager Bill Gross discusses Greece's debt. He speaks on “Bloomberg Markets.”
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About Bill Gross
Bill Gross, cofounder of Pimco, appeared at the third annual Bill Gross Business Plan Competition at Caltech on April 16, 2026. The competition, hosted by Caltech’s chief innovation officer Fred Farina, featured ten finalist teams selected from over 70 applications. Gross spoke about his own experience as a Caltech student, describing a presentation he gave in a class called E10 as one of the most valuable things he learned at the school. He said that "the ability to take your idea, crystallize it into a story and tell it to the world is really, really powerful." During the event, Gross also discussed his views on entrepreneurship, stating that it "unlocks human potential" and that forming a company with shared equity enables people to "feel like owners" and accomplish things "like never ever before." He added that the tools available to entrepreneurs today, including AI and other technologies, are "better than ever before." The competition also included a trailer for a new podcast, "Einstein Suite," which Gross co-hosts with Fred Farina, described as a series of conversations at the intersection of science, art, and culture filmed in the room where Albert Einstein stayed while at Caltech.
Transcript (9 segments)
✨ AI-enhanced transcript with speaker attribution
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Bill Gross0:00
Ultimately it comes down over the next few weeks as to whether the Greek debt and the Greek standoff. The Greeks want a significant restructure of their $300 billion plus Euro debt. The Troika does not, and so the Troika believes a write-off is primarily government and supranationally owned debt. They believe that'll set a precedent for other peripherals, and the Greeks claim that the write-offs in many countries are inevitable. Actually, I think, and I'm on the side of the Greeks here, the Germans are being disingenuous with their portion of the debt because they've had massive restructuring of their own debt after World War I, then after World War II, when an accord in the early 1950s reduced their debt from 100 to 20% of GDP. So the German example, of which they claim should not be applied to the Greeks, has been their historical experience over the past 100 years.
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Interviewer0:58
Well Bill, to that point, Germany has shown no willingness to undertake a Marshall Plan-like solution for the situation that the Greeks confront. If that continues to be the case, again the focus will shift to Draghi. There's much expectation that the Greek crisis is going to test Draghi's resolve to backstop the rest of peripheral Europe. Does that create some trading opportunities?
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Bill Gross1:23
Yeah, I think it does, and I think that's what we're seeing this morning with the hurricane that I suggested. In the eye of the hurricane, you're seeing massive support behind the scenes, of course, on the part of the ECB. You're seeing massive support by the Chinese in terms of their stock market. You're seeing basically central governments throwing everything they have at the markets and keeping them calm. Ultimately though, Draghi has to wonder whether the purchase of Spanish debt and Italian debt leads to the same type of conclusion down the road as what perhaps is beginning with the Greek example. The ECB is owed, as I've mentioned, over 100 billion euros by the Greek banks, which appear to be insolvent. And to the extent that they continue this program of ELA for other peripherals, then perhaps down the road you have the same situation. So the Eurozone, the Euro Union, certainly is at risk here in terms of their arrangement with a central bank that at some point has been unwilling to extend additional credit to one of their creditor and member countries, namely Greece.
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Interviewer2:36
Bill, I have to jump on your point about Chinese stocks. It was back on June the 3rd that you tweeted, 'Up next, the China Shenzhen Index.' You were talking about a potential short, but at that point you said, 'Not just yet.' Did you end up shorting Chinese stocks? Did you get in time to, if you will, enjoy the dramatic, breathtaking declines in volatility we've seen since then?
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Bill Gross3:01
Well, I did come public and say short the Chinese stock market through a Barron's recommendation that came public about four weeks ago. So I'm on record as having reached that point in terms of the Chinese stock market. Where we go from here, since the market is down 20 to 25% from that point, it's hard to say. Like I say, the Chinese authorities, through increased margin and through increased regulation, lower interest rates, it's been a massive support program for their stock market, which supposedly the world thinks is relatively insignificant, but I think it is important. And I'm rather proud of that call, although I said 'not yet' during the tweet, but two weeks later in a Barron's article I said, 'Now's the time.'
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Interviewer3:50
Bill, can I ask you one final question about Greece? How long can you run an economy like this without a functioning banking system?
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Bill Gross3:58
Well, I don't think you can, and that's why I think they have a week or two to settle this. And the arrangement has to be coordinated with the ECB and with the EU. Within the Eurozone, basically, to my way of thinking, the zone as led by Merkel and the Germans basically have to come to some agreement in terms of restructuring versus a write-off. To the extent that there's not a write-off, then the European banks and other institutions are safe from the standpoint of keeping their debt, not only to the Greeks but to the institutions, the EFSF and so on, on the books. But to the extent that there's a restructuring that favors them, to the extent that there's a write-off that does not, I think Greece will want a write-off. I think the Germans and the EU will want eventually a restructuring, but it has to be done within the next two weeks. July 21st is the key day. If the Greeks do not meet a 3 billion euro payment at that point, then basically the ELA, the 100 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.
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Interviewer5:17
Bill, very quickly before we go, is a Grexit, if you will, or so-called Grexit, an exit of Greece from the Eurozone, your base case scenario for this country right now?
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Bill Gross5:28
Yeah, I think it is, you know, 70 to 80%. And again, it depends upon whether the Germans are willing to concede that perhaps austerity to the extent that they've enforced it in Greece, and to the extent that the restructuring or debt write-offs are a necessity in the next few weeks, which will be hard to agree upon with all the EU members. It's a German-led decision. They suggest that it's in the Greek hands, but I think it's in the German hands. And to the extent that the Germans are unwilling to come off of their position and to extend their marginal line, I think a Grexit is a 70 to 80% probability.