Steven A. Tananbaum Senior Fellow for International Economics Robert Kahn argues that the concerns driven by China's economic problems are modest compared to the 1997 Asian financial crisis or the Great Recession. However, there are reasons for concern: large financial imbalances, weak global growth, inadequate official resources, and political pressures. While a severe global financial crisis remains a tail risk, policymakers need to be prepared to respond.

Bottom Line: There's a strong consensus that this fall's fiscal showdown will result in a compromise agreement, but a deal may be harder to get than markets anticipate. Have pity on the U.S. fisca…