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Two steps forward, one step back regarding Europe's debt crisis. Just when it looks like the debt crisis will be contained, and credit markets will start to normalize, one of the world's leading bond managers sees more problems ahead, in a year or so.PIMCO's Bill Gross, who heads the world's largest bond fund, said a debt restructuring for Greece is all but inevitable, later if not sooner.
"The growth required in order to shoulder Greece's debt burden is so excessive and the fiscal restrictiveness being imposed on the country is so restrictive they there will be no way out," Gross told Bloomberg News Wednesday.
"Restructuring at some point down the road -- perhaps a year or two years down the road -- will take place," Gross added.
Meanwhile, the euro has rallied in the past two days, including a 2.3-cent surge Thursday versus the dollar to $1.2388, after China said the Greek debt crisis will not have a big impact on China's overseas investments, Reuters reported Thursday.
Monetary/Economic Analysis: Gross is correct: Some form of Greek debt restructuring is inevitable, and that implies at least some return-on-investment reduction for investors. That said, a Greek debt restructuring does not imply 'the end of the euro' or a break-up of the euro-zone, and that realization partially accounts for Thursday's euro rally, along with China's comments, which were both unexpected and calming.
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