What is the impact on the United States and how can Washington influence events in Europe?
Potentially, this has an important impact on the United States. There are two main sets of impacts. The first set of impact is to trade. Europe is a very important trading partner of the United States; it is the world’s largest trading block. If Europe does not grow and furthermore if the euro is extremely weak, it’s more difficult for the United States to export its way out of its problems. As you know there is an objective, a stated objective on the part of the Obama administration to double exports in five years to become less reliant on domestic demand and more reliant on world demands. The more important risk to the United States comes to the financial angle and in one word, the concern is about fear. Will we have a return of the credit crunch that sank the global economy eighteen months ago because banks become very concerned about lending to each other or banks lending at all, given the fact that European banks are of course laden with European government debt, as you would expe
