What does turmoil in Ukraine mean for markets? It depends on how long it takes to resolve.
Right now, it has taken risk off the table, sending Wall Street reeling at the opening bell. It's likely to be a further headwind for the global economic recovery. The U.S. has some $38 billion in trade with the Russians that is now in at least some peril. Throw in the rough winter, and the Ukraine is another data point that weakens global growth.
Ukraine may be far away, but it is clearly influencing global markets. Most European bourses are down two to three percent—this is after very encouraging manufacturing reports for February. Grains are up, with wheat up 4.6 percent, oats and corn also up two to three percent. Gold at a four-month high, while oil is up two percent.
The Russian stock market is down 12 percent today, but that is not going to deter President Vladimir Putin.
Regardless of the economic or market toll, not a single person I spoke to over the weekend thought Putin was going to cave in or back down— certainly not on a Crimea invasion.
It's not clear what could be done to preserve the territorial integrity of the Ukraine. But then again, the Ukraine has not had much of a history as an independent country.
The Russians have a strong emotional attachment to the Crimea and the port of Sevastopol, which has been a Russian naval port for over 200 years. In fact, the Crimea has been part of the Russian empire for over 200 years. Sixty percent of the Crimean population are Russians. It was only transferred to Ukraine in 1954 by Nikita Khruschev, who nonetheless granted it a large amount of autonomy.
The rest of Ukraine was absorbed into the former USSR after the Russian revolution. It only split from Russia in 1991, after the Soviet Republic dissolved.
The Russians have been invaded many times (last, most notably, by Nazi Germany) and one thing they obviously want is some kind of buffer zone between them and Europe.
They've been willing to act against former Soviet states before. Robert Hardy points out that protection of Russian citizens was the exact excuse used by Putin in 2008 for his war with Georgia.
Let's hope that the West will be able to formulate some sort of coherent response that will effectively deter Russia from taking over the rest of the country. Should they try to move into Kiev, there will certainly be significant bloodshed.
Sanctions are the most obvious choice here. Kicking Russia out of the G8 and going to the G7 is also an obvious choice.
Certainly, this will be costly to Putin. All the money spent on Sochi will be for nothing...who's going to go there? Meanwhile, Russia is a major trading partner with the European Union.
The cynics point out, so what if that happens? So what if the Russians keep the Crimea and the rest of the Ukraine stays with the West? The Russians keep the Crimea and the port and their fleet, and the West inherits a basket case of a country that needs billions of dollars of support, immediately.
Does the West have the money, let alone the will, to stabilize the Ukraine?
—By CNBC's Bob Pisani