How the Financial Crisis in Europe May Impact the United States

Simon Johnson, the former chief economist of the IMF, offers his take on troubles across the pond and lessons the U.S. can learn from them.

Although stock markets around the globe, including in the U.S., have calmed down lately, many investors are still gazing nervously at the unfolding financial crisis in Europe. The latest jolts: The announcement from bond rater Moody’s that it had lowered Ireland’s debt rating by five notches and placed the bonds of Portugal and Spain under review for possible downgrades.

To learn more about the Euro crisis and its potential impact on the U.S. economy and the markets, we checked in with Simon Johnson. A professor at the Massachusetts Institute of Technology’s Sloan School of Management and former chief economist of the International Monetary Fund, Johnson has worked on crisis prevention and issues relating to economic growth in both advanced and emerging nations for 20 years. He is the coauthor, with James Kwak, of the book 13 Bankers: The Wall Street Takeover and The Next Financial Meltdown (an updated paperback edition will be available on January 11), and he writes a blog called the Baseline Scenario.

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Jennifer Schonberger
Staff Writer, Kiplinger's Personal Finance