ETFs: Market Maker or Mirror?

Exchange-traded funds (ETFs) are the defining investment vehicle of the times, the perfect vehicle for expressing post-Lehman Brothers angst about the troubles of the world, from the debt crisis in Europe to the slowdown in China and the fiscal and economic challenges in the U.S. In an era when sentiment about global events often takes precedence over the fundamental performance of individual companies, ETFs have soared in popularity because they allow hedge fund managers and other institutional investors to trade in and out of entire markets in an instant. Does the risk level in Europe appear to be on the rise today?