Billionaire Wilbur Ross believes there is a high probability Greece will exit the eurozone, which could send the nation into economic collapse and prompt a stock market crash.
During an interview on Tuesday, July 7th, the distressed asset investor told CNBC he believes there is a 40% chance Greece will leave the eurozone. (Source: CNBC, July 7, 2015.)
“All the polls I’ve seen show a clear majority of the Greek people want to stay in the EU,” he explained, “Now, it’s also true that they don’t want austerity and those two are logically inconsistent.”
Over the past few weeks, the overall equity markets suffered dramatically from the uncertainties surrounding the Greek debt crisis, but Ross thinks, deal or no deal, the consequences may not be as dire as they would appear. He stated, “It shouldn’t be that this is terribly disruptive to world markets.”
“You would have the drachma trading somewhere between 25 cents to 50 cents on the euro,” Ross suggested, “So it would be a pretty bad haircut for the people.”
Greek banks have been closed for more than a week and are expected to remain closed until Friday. The government also imposed a capital control of a maximum 60 euros (roughly $65.00) per day to prevent the collapse of the country’s financial system. Evidence indicates that banks are expected to run out of cash; Ross thinks, “the banks were already running out of 20 euro bills to dispense at ATMs—forcing branches to give out 50 euro bills instead of three 20s.”
When asked whether he thinks there would be a deal or not, he added, “If they don’t make a deal, and you do have a collapse in the economy, that could be a very different situation.”
In spite of the bad headlines, Ross remains bullish of Greece. His hedge fund, WL Ross & Co, has poured $1.8 billion into Greece’s Eurobank in 2014. He’s still hopeful that he can make some returns despite the country’s default on its financial obligations.
“You can’t have successful banks without a successful economy, and you can’t have a successful economy without successful banks,” he concluded. “Their fates are inextricably entwined.”