Diversify your portfolio now

moment. the question of the day, have the u.s. markets which are holding up relatively well in world terms, priced in the european debt crisis? joining us now to discuss that and more, david kelly and mark matson. welcome to you both. david, let me ask you a different kind of question. would it really be so bad if greece defaulted? we've had defaults before of sovereign nations. yes, it would in this situation because the problem is that greece is part of a fixed currency regime. if this was a small independent, small open economy, it defaults, the currency collapses. it goes down 30% or 40%, they become more competitive, they work their way out of it, not a big deal. and also not many countries would have a huge investment in that country. but in this situation, a lot of banks around europe are complaining of greek debt on their books. they don't have the opportunity of devaluing their currency. the question is if greece goes who recollects's next? all those things make a greek default extremely perspective. mark, he makes very interesting points here. the interconnectedness question, the domino effect that might eventuate. it is part of a unified currency. what do you say? the original question is, have markets already priced it in? i would make the argument that markets are extremely efficient. all the market participants have known for over a year that greece was potentially at risk. there's been 73 defaults in the last 100 years. most of this is already priced into the system because markets are efficient. my message to investors are, you have to stay diversified. you should be looking at this as a short-term opportunity to buy more european equities, buy more u.s. equities, rebalance your portfolio. but in reality, most people buy high, sell low and repeat until they're broke. we need to be prudent and diversify right now. david, do you agree? is it priced in right now and is it inevitable? well, we have priced in all but armageddon as far as i can tell. if you look at u.s. stocks and u.s. treasuries, stocks are cheaper to treasuries today than they've been at any time the last 50 years. to me, that means we have priced in a lot of bad stuff. it is not inevitable. that's what's so frustrating about this. what we have is incompetent policymakers, to my mind n dealing with this problem. we need to have fiscal transfers. if you have a currency -- for example, if greece was new mexico, then the rest of europe would be paying for half of greece's government spending because within a currency unit, you've got a single country, usually these fiscal transfers are going on. but greece is a poor nation, it has a lot of problems. it would be much cheaper for the rest of europe to dig into its pockets, transfer money into greece, help them grow their economy. that's a much cheaper solution than try to use austerity, everybody's on their own and expect it to work in a currency union. it's not inevitable. but unless we get more intelligent policies coming from europe --