Squawk Morning Briefing: When You Lie Down with PIGS

The old saw goes, “when you lie down with dogs you wake up with fleas.”   It seems that when one lies down with PIGS, one wakes up looking for one’s wallet.   News reports are crediting fears of a Greek default with causing a European sell-off overnight.  At some point “fear” will be replaced with “certainty” but that is unlikely to benefit the situation in Europe.

The choice to allow Greece to enter the EMU was a choice to let the flea ridden dog into the house; after all if Greece defaulted on its obligations now it wouldn’t be the first time; merely the first time since the formation of the EMU.   And while the halo of Brussels shined on Greece for awhile, the realization is finally here that the sunlight of a good reputation is not equivalent to flea dip.  And so after celebrating the success of the Euro having brought the stability of the Mark and the Franc to all of Europe, the realization may be finally dawning that perhaps the continent really agreed to standardize on the Drachma.

The implication to markets and the current wave count is in today’s videos.

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