The international sport

Beginning about a week and a half ago, one of the world's largest sporting events kicked off in South Africa, the 2010 FIFA World Cup. Soccer (football in most of the world) is the most played sport in the world. Personally, I do not like to watch it or play it. Not being a fan makes me wonder why is soccer universally loved? This post is dedicated to a theory on why soccer is the international sport.


Issue #1: Entertainment

For people to play a sport and continue a sporting tradition, the sport has to be entertaining. No one is going to play a boring sport. No one is going to watch a boring sport. What may be fun for one person, may be drudgery for another. This is universal to all competition. What is required in a sport's continuation generation to generation is mass entertainment appeal for both participants and those watching a sporting event.



Issue #2: Cultural adoption

Adopting a sport requires the game not to offend the native culture or religion. Another point that would make a sport's rejection would be the sport reminds a group of a rival, conquering tribe/nation.



Issue #3: Nonviolent action

It can be said that violent sports permeate the world. Their appeal tends to be limited though due to the destructive nature on participants. It is much preferable to play a sport that allows one to live a long, healthy life and even participate in one's later years in comparison to a senior broken body.



Issue #4: Accessibility for the masses

The majority of professional athletes in the major sports do not come from wealthy families. It is difficult to gather enough athletes for a successful league using only well-to-do athletes. Wealthy classes do not push chidren towards professional sports. Building a large fan base would also be difficult without the majority of average citizens. The classic sport that fits this category is skiing. The game has to be simple and be accessible to even the poorest children to be universally adopted.

Looking at the major sports limited to a few countries, here is where they fail to meet the criteria above.

Archery and shooting sports - Not entertaining, lacks accessibility since bows/arrows and firearms cost quite a bit.

Baseball - Need a glove, bat and ball to play. Baseball requires significant sized field. Inaccessible to the poor. Of the major American sports, this is the most international.

Cricket - Same as baseball except British. It has the further disadvantage of being complex.

American football - Violent

Running - Not entertaining for the masses

Golf - Extremely expensive sport requiring a course, thus, inaccessible to the poor.

Tennis - Tennis is similar to golf.

Basketball - The only disadvantage basketball has is the requirement of a hoop on a court. It has the potential to become universal sport over time.

Soccer fits all of the criteria above. Soccer only requires a ball and very little space to play. The rules are extremely simple. It also had the further advantage of being spread through the late British empire at the end of the 19th Century.

Slippery slope of Greece

The mainstream US media tends to emphasize stories that often bring about passion from their directed audience. Americans are often disconnected from important world events. The cause of this international detachment is our relative large size or isolation from the largest Europe/Africa/Asia landmass is a topic of long debates. In either case, economic events in Europe may be powerful enough to reach our sovereign shores soon. It has to do with national debt of the commonly referred to PIIGS, (Portugal, Italy, Ireland, Greece and Spain) and its influence on the economic entity the European Union (EU). We are going to specifically focus on the current hot spot, Greece.

Greece is facing debt on the order of 120 % of its gross domestic product (GDP). It would take over 1 year and two months of the country's complete economic output to pay off this whopping total. This is one of the highest debt loads in the world. It grew to this large size through many avenues, some of them legal and others illegal underneath the Treaty of Maastricht forming the EU. Greece was supposed to limited its yearly deficit to just 3 % GDP by treaty terms. It seems the the Greece government has been cheating on this promise in many ways. I will avoid details here. What I am going to discuss are potential international responses to this mess from best case scenario to worst case scenario. I call into question any "best case" options though.

Option 1: EU bails out Greece with emergency loans at low rates and Greece implements austerity budget spending.
Results: If the money comes in from the other EU members, it will give Greece a little breathing room to fix problems. This requires the most powerful EU member's, Germany, blessing. If the money does show, I rather doubt Greece will do more than superficial changes to government spending. Greece has cheated on its obligations in the past, thus, why should it change now? EU members know this. The cash influx would last about 6 months and nothing structurally would have changed. Greece would be where it started. Even if the austerity measures were fully implemented, Greeks make is a national past time to protest. The economy would face a decline in productivity resulting in further economic problems.

Option 2: Bailout from the US Federal Reserve in low rate loans
Results: Same as in option 1. The advantage of this scenario is it could be kept secret. For Europeans, it is the best option since Europe do not have to pay. American taxpayers get the bill when option 4 below occurs.

Option 3: International Monetary Fund (IMF) steps in and gives emergency loans to Greece.
Results: Same as option 1 again. Two negative aspects loom here. One, I believe this would break terms of the EU. Other EU states would retaliate, dumping on Greece in various ways. Greece might get thrown out of the EU. Two, the spending restrictions the IMF imposes during its assistance programs are harsh. Greece will enter into an economic downward spiral as socialist union workers shut the country down from mass protests.

Option 4: Greece defaults on sovereign debt
Results: It is impossible to determine what will occur after the actual fact. Greece would enter into a severe depression though. The key is membership within the EU. Will it remain a full or partial EU member? Will it keep the euro as a currency? I am guessing the IMF would step in here and impose their will. Greece would have to accept a bitter pill.

Reviewing the four options above, unfortunately they all will lead to option 4. The amount of debt Greece has accrued is too much. Greece is not positioned towards a future booming economy in their current political and economic position. The bailouts (options 1-3) lead to just more debt down the road, thus, they default eventually. To put in prospective, if they pay 4.5 % annual interest on their 120 % GDP debt (~$340 billion USD according to Wikipedia) that translates into $18.4 billion (5.4 % of all economic activity) annually to service their debt interest alone. This value does not include debt principle repayments (much higher value). In recent Greek bond issues, the interest was north of 6%. They are paying significantly more than just outlined!

We are just using Greece as an example of the debt problems facing all the PIIGS. The other oinkers are much larger nations and have similar debt problems. How this will effect world bond, commodities and equity markets will be determined over the next few weeks to months. The time frame depends on if one or more of the initial three options occur, delaying the event.