Futures are lower as sovereign spreads are blowing out yet again. I believe that we are likely to see a Greek default in the months ahead. There is now widespread disagreement in Europe with regards to Greece. Without unity there cannot be another bailout, unless there is a restructuring (aka default).
A Greek default would pose problems for other PIIGS as they also require bailouts. It will be a lot harder to sell the idea of more bailouts to taxpayers around Europe when they just lost a lot of money to Greece. Why should taxpayers in one nation pay for profligate spending in other countries?
The issue does not end there as European banks are up to their eyeballs in sovereign debt and would require huge recapitalizations. Huge bank recapitalizations would stress European markets in addition to slowing markets because of the lower government spending that defaults would result in.
Few seem to be concerned about Europe because we have had so many fire drills that have turned out to be buying opportunities. The same occurred in 2007 with regards to the subprime crisis. We had warnings all year yet they turned out to be buying opportunities as the market climbed through October of 2007. I suspect that one day the fire will be real and that it is not that far away.