Ten Billion Risks in Greece's Summer of Discontent

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Now, there's an argument that with so much else going on in the European theatre, Brussels will be keen to fudge a solution just to get Greece off the agenda. The IMF may not be so willing to oblige, however. If May comes and goes without a deal -- be it because of German intransigence on debt relief, IMF stubbornness on budget targets, or Greek brinksmanship -- Greece and its creditors may run out of time to avoid default.

As Greece's debt repayment deadlines approach, EU officials may be busy fighting fires kindled by Britain's June 23 referendum on EU membership. The outcome of that vote is far from certain. Bloomberg's composite tracker of opinion polls puts votes to remain in the EU at 39 points, those wanting to leave at 38, with "don't knows" holding the balance of power at 23.

Renewed concern about the European project is just starting to surface in the bond market. Investors are now charging Portugal 3.3 percentage points more for 10-year money than they demand from Germany, a spread that's well above its six-month average of 2.2 points. Italy's risk premium rose to 1.3 points last week, up from December's low of 0.9 points, while Spain is at 1.4 points, up from 1.2 points a month ago. That's not enough to ring alarm bells; but it's odd at a time when the ECB is increasing its sovereign bond purchases.