For now, Europe’s voters roil the markets. Soon, investors will be fretting about Florida and Ohio. The US election in November will have unusually immediate and dramatic consequences for the economy. A recent investment bank conference call concluded with the advice that clients should “buy volatility”. Translation: be scared.

It is easy to see why. At the end of this year, tax cuts introduced by President George W. Bush will expire unless legislative action is taken – meaning the US Congress will have to come up with a tax law that the president is prepared to sign. Spending cuts enacted last year will also come into effect unless a legal change rescinds them. And other props to the recovery – from a payroll tax holiday to a temporary extension of unemployment insurance – are due to wind down. To complicate things further, the federal government will once again be up against its debt ceiling. Last summer, raising the ceiling involved an unseemly food fight that cost the US its triple A credit rating.

These pressures might be welcome if they forced compromise in Washington. But the omens are bleak. Rather than seek a mandate to eliminate tax loopholes and discipline health spending, which are the two central components of any intelligent budget fix, candidates on both sides resort to sound bites.