The 10-year German bund currently trades at a price of about 104, for a yield of 0.09 percent (which is as close to zero as makes almost no difference). For it to replicate the performance of the pound all those years ago, the price would have to drop to 89.4 by May 13:
If 10-year German debt -- one of the few countries still rated AAA by all of the major rating agencies, a privilege even Uncle Sam doesn't currently enjoy -- was suddenly yielding 1.7 percent, Spanish bonds (currently at 1.4 percent) or Italian debt (1.42 percent) and even U.S. Treasuries (1.9 percent) would see the biggest jump in yields ever. Government and corporate borrowing costs everywhere would surge as investors reassessed the value of fixed-income securities in light of the German move; the knock-on effects into other asset classes would be catastrophic as yields rose, bond prices fell and investors backfilled their losses in a wave of selling and margin calls.
It does seem intuitively uncomfortable to be lending money to the German government for a decade in return for less than one-tenth of one percent (and indeed to be paying for the privilege of lending for any time period shorter than nine years). So Gross may well be right. If he is, and German bonds suffer the kind of collapse that would echo how the pound performed in 1992, investors will find themselves in the midst of a financial Armageddon that could make the Great Crash of 1929 look like a walk in the park.