Cofounder, PIMCO
Bill Gross Sees 70-80% Chance of Greek Exit From Euro Area
July 6 -- Bill Gross, who runs the Janus Global Unconstrained Bond Fund, talks about the Greek debt crisis and the likelihood of an exit by the country from the euro area. Gross, speaking with Erik Schatzker and Guy Johnson on Bloomberg Television's "Bloomberg Markets," also discusses investment strategy for Chinese stocks.
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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 (15 segments)
✨ AI-enhanced transcript with speaker attribution
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Interviewer0:00
Other than Bill Gross of Janus Capital, he is manager of the Janus Global Unconstrained Bond Fund with us today from Newport Beach, California. Bill, I'm worried we might have a little bit of a delay here, but let's work with it. I want to start with you, if I may, Bill, on the point about Mario Draghi. If you happen to be right now today the president of the European Central Bank, how willing would you be to throw more liquidity at the Greek banking system?
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Bill Gross0:27
Well, throwing more liquidity at the Greek banking system is certainly problematic. Every billion of euros that they throw to the Greek banks through the ELA basically ultimately has to be written off. They've produced a hundred billion dollar ELA program that at this point they owe to themselves. The funds have been basically withdrawn and turned into euros on the part of the private sector and the ECB is stuck with the tab. So Draghi suggests that he doesn't want to be political here, but yet at the same time he is the central banker for the Euro zone and Greece is still within the Euro zone. So it's a diplomatic, it's a problematic, it's a legalistic potential situation that is not easy to forecast. But I would suggest that if Draghi doesn't at some point provide additional funds and then if Greece does not pay the three billion euro debt on July 20th or 21st, then there's going to be significant problems within the system.
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Interviewer1:39
Bill, do you think a haircut on depositors or possibly even a full-scale bail-in is possibly even inevitable at this point?
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Bill Gross1:50
Well, that was the Cyprus situation. Greece is a bigger country and the problem there becomes, Eric, that if it happens in Cyprus and if it happens in Greece, then why can't it happen in Spain and Italy and Portugal and other peripheral countries? And so the flight for liquidity begins in peripheral countries if in fact there's another bail-in. So I don't think that that's the proper solution, but it's certainly a possibility as evidenced by the Cyprus situation.
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Interviewer2:27
Bill, Guy, we were told that it would be doom and gloom, that the markets would fall out of bed if we got a no vote. We got a decisive no vote in the referendum. Yet the market reaction stunningly calm. Are you surprised by that?
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Bill Gross2:41
Yeah, I am surprised. Sunday was a fireworks day here. Saturday was a fireworks day here in the United States. It appears that we're in the eye of the hurricane. I do not believe that this situation really is calm. Ultimately, it comes down over the next few weeks as to whether the Greek debt and the Greek standoff, whether or not 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, you know, 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 and 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 hundred years.
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Interviewer3:54
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 Gross4:20
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 a hundred 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 Euro zone, 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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Interviewer5:32
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 in time to, if you will, enjoy the dramatic, breathtaking declines in volatility we've seen since then?
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Bill Gross5:56
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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Interviewer6:46
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 Gross6:55
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 Euro zone. 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 date. If the Greeks do not meet a three billion euro payment at that point, then basically the ELA, the hundred billion dollars 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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Interviewer8:14
Bill, very quickly before we go, is a Grexit, if you will, or a so-called Grexit, an exit of Greece from the Euro zone, your base case scenario for this country right now?
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Bill Gross8:25
Yeah, I think it is, 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 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.
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Interviewer9:09
Bill, it's amazing how distance can provide clarity to a situation like this. We thank you so much. That is Bill Gross of Janus Capital, manager of the Janus Global Unconstrained Bond Fund.