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Despite the persistent Euro debt crisis coverage, there are other risks that we must bear in mind heading into 2012.  In his latest client note David Rosenberg elaborated on 5 of the biggest risks heading into the new year.  Aside from the EMU debacle, he cites oil prices and an ignorant American political charade as the greatest risks.  I’d only add that a Chinese slow-down is still very much a risk to the global economy.  Via Gluskin Sheff:

1.  Despite the high hopes, there is no sign that the new technocratic political regimes in Greece and Italy (led by economists!) will prove to be any more effective in pushing through reforms than their predecessors, especially given the rapid weakening pace in economic activity.

2.  Oil prices have soared 15% since the beginning of October (Brent is trading just below $115 a barrel), throwing a wrench into the one source of support for the “real” economy for the couple of months, which was the depressed deflator.  Gasoline prices, which had gone down last month are not about to head up again.  The problem is that Thanksgiving for retailers is just a tad more important than Halloween.

3.  We may see confidence sapped yet again if the budget Super Committee fails to come up with any compromises ahead of the November 23rd deadline.

4.  None, if any of the Obama jobs bill lives to see the light of day.  If extended jobless benefits, payroll ta relief and bonus depreciation allowances are not permitted to expire, then we can expect to see anywhere from a two to three percentage point fiscal stimulus withdrawal out of GDP to kick off 2012.  Right now, this is not on the investor radar screen.

5.  While we are seeing governments topple in Greece and Italy and words turn into action at the parliamentary level in any event, the situation in Europe remains one of a show-me nature.

Source: Gluskin Sheff

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