Default Already Will Ya?

Will Greece default this week? The question that has been on many minds over the past two years could come to a head in the oncoming days. Maybe it's the NFL season getting to me already, but I can't help to feel like I am watching a team tries to punt on every down. Whether kicking the feta down the road can work or not, one thing is certain. Things ain't gettin' any better.

As the euro sank 1.6% versus the dollar last Friday alone, yields on U.S. Treasuries and German bonds fell to record-lows. The euro has continued its free fall and we all know the reason...

The trouble stems from the second Greek bailout package of this past July. The $109 billion luxury fiat cannot arrive in Hellenic dealerships without the approval of all 17 EMU nations. Naturally, some are more skeptical than others. If I only I knew how to say this in Italian it would be more convincing.

Last week, IMF and EU officials unexpectedly left Athens during a review of the government's progress on its debt reduction program. That gave rise to speculation that Greece may not be able to hit certain fiscal targets that are a condition for its bailout loans from the so-called troika.

With the DAX plummeting and the Greeks doing the deer in headlights routine, fear of contagion to countries such as Italy and Spain is greater than ever. It seems as though we are watching a government face the age old market quandary which has crushed so many firms in the past. Though it always pains me to quote Keynes, the man was definitely right when he said:

Keynes:

The market can stay irrational longer than you can stay solvent

The small caveat in this case, however, is that the only "irrationality" of the market with regards to Greece is how it has been kept from going over the cliff for this long. With the NFL season officially under way I am certainly tempted to talk about punting more and more as it is certainly the economic strategy du jour all over the globe. There is another aspect of the NFL's way of doing business which may herein find itself worth mentioning...

The National Football League is the only professional sporting league on earth which knows no such beast as a guaranteed contract. Even surefire Hall-of-Famers like Peyton Manning can find themselves cut for the sake of balanced books and ensured profit generation. Perhaps it is high time that the European Union, the IMF, the World Bank, the Paris Club, etc adopted the mantra of NFL owners when it comes to its players. In this example, Greece is like the hotshot prospect who signed a $100 million dollar deal and then broke its arms, legs and back while tap dancing drunk on a floating iceberg casino. It will definitely hurt the league to cut them...but can the league continue to operate if it doesn't eventually put its foot down?

It seems that even hardened Commissioner Merkel is ready to throw the yellow flag on this play.