Keep a close eye on Europe
Put all of these factors together, and you can see that, although both China and Europe have real problems, Europe has far less political ability to deal with its issues. Its track record hasn't been great over the past five years, and it doesn't seem likely to improve as the problems multiply.
In the end, the transition from problem to crisis often comes down to politics, and that is what makes Europe by far the riskiest bet. (This also raises concerns here in the U.S., of course, but that's a conversation for another day—and also not an immediate risk.)
For the moment, if you’re looking for the oncoming bus, watch out for Europe, not China.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by McMillan.