This column originally appeared on Real Money Pro at 7:59 a.m. EDT on Sept. 30.
NEW YORK ( Real Money) -- If you are looking for a potential black swan or disruptor that could upset the markets, look no further than global government dysfunction.
In the U.S., politics used to be different. Republicans and Democrats of the old guard disagreed as often as they do today, but the difference was that politics worked back then, as there was compromise. They argued, but they were civil and respectful. Through a concerted effort, both sides of the pew tried to accommodate the other side. They had the ultimate sense that they were all in it together. There were no non-negotiable demands. Back then, partisanship in the Congressional chambers during the week was followed by drinks and dinner at a local Washington, D.C., watering hole on Saturday evening, where compromises and agreements were achieved. Today, leading members of both parties hate each other, and there is no concerted effort to work toward accommodating each other's positions. They are not civil to each other, anger is at pitched levels, and Saturday dinner together is not even a consideration. There is little search for compromise. Fortunately, or unfortunately, dysfunction on our shores is more than rivaled overseas.
Greece, in the spotlight for several years, shows no signs of stabilizing. The Greek political party that received 7% of the vote in the last elections has 18 members of Parliament who currently are jailed; they are charged with organized crime. A group of Greek special forces reservists have demanded the resignation of the government. But it is Italy that poses a more immediate threat. With Berlusconi ordering his ministers out of the Letta regime on Saturday, the current government is disintegrating, and chaos is the operative condition. A widening in the German and Italian bond yields should occur this week, and a ratings agency downgrade may not be far behind. The key knock-on effect is whether investors will begin to question the ability of European sovereigns and banks in the eurozone to retain market access. (Remember this is occurring at a point in time when many investors have given European investments a green light based on an emerging cyclical economic recovery and a passing of the debt crisis.)