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Commentary

European Vacation Is Over

As a placid August comes to a close, Europe needs to begin to translate talk into action.

August has been a breath of fresh air compared with the summer turmoil of the last few years. There were no debt-ceiling debates or enormous market sell-offs, but there was reduced volume and volatility. Overall the market rose 1.5% during the last four weeks as investors took a (much-needed) break.

The market's permission slip to take this break was signed by European Central Bank head Mario Draghi earlier this month. His comments that he is ready to do whatever it takes to save the euro and that the common currency is irreversible were seen as the clearest sign yet that the ECB was ready to peruse more unconventional means to stem the crisis. Add in some news reports that Germany's chancellor Angela Merkel was ready to be more accommodative and concede some ground in order to help ease negations with debtor nations, and the tension level seemed to have dropped dramatically.