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'Dangerous Game' in Debt Crisis: Fund Manager

Politicians on both side of the Atlantic are playing a "dangerous game" over the debt crisis, Beat Wittmann, Chairman of DynaPartners, told CNBC Tuesday.

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"The guy who holds out last with the deepest pockets and best nerves prevails and that's a very dangerous game because the capital markets are punishing them," he said.

European shares closed Monday at their lowest level in four months as the market absorbed the most recent stress tests on the region's biggest banks, although they took back some of these losses in early trade on Tuesday.

In the US, President Barack Obama is under intense pressure to forge a debt deal to avoid the world's largest economy defaulting on its debt repayments.

He is facing opposition from many in the Republican Party, who want cuts to public spending instead of tax rises.

"We have a lot of party bickering on one side, and country bickering on the other," said Wittmann.

"We have a political game on both sides of the Atlantic about the debt situation and how to solve it."

"We must pursue a fallback or last-ditch option ... Conversations about that have been ongoing," White House spokesman Jay Carney told reporters Monday.

Although some early signs from the second quarter corporate earnings season have been positive, with software giant IBM announcing better-than-expected results Tuesday, equities are still suffering as investors pile into safe havens such as gold.

"In the short term, the risk off trade is on because of bad macro flow on both sides of the Atlantic," Wittmann said.

"The macro-economic situation is dominating the earnings picture," he added.

"The financial sector is the best example of this. The big US banks have improving balance sheets and economic conditions, yet they are trading at half times their book value and they are being sold off because of the debt impasse in the US."