Which is a greater force driving volatility: uncertainty about whether the U.S. can get its budget act together or Europe’s future? I would argue that Europe poses a much greater risk -- and it is less understood in Canadian and U.S. markets. While it is frustrating that the U.S. is mired in partisan politics -- at least there are only two groups of players, Democrats and Republicans. In contrast, in Europe you have: 17 national governments, the European Central Bank, the European Financial Stability Facility, the Financial Stability Board, the European Council, the EU, the Institute of International Finance, the IMF, BIS, ... get the idea?
Let me try to navigate through the mess in Europe.