–Senate Budget Committee Chief: ‘Clear’ Impact On US of Euro Struggles
–Sen. Conrad: European Econ Crisis Has ‘Ramifications Across the Globe’
–PIIE’s Bergsten: Fears of Eurozone Crisis Are ‘Vastly Overblown’
–Bergsten: Eurozone’s Struggle Should Be ‘Wakeup Call’ For US
–MIT’s Johnson: ECB IS ‘Treading A Dangerous Path’

By John Shaw

WASHINGTON (MNI) – Senate Budget Committee Chairman Kent Conrad
said Wednesday the political and economic crisis ravaging across the
Eurozone is having “ramifications across the globe,” adding that its
“threat to the U.S. economy is clear.”

In a Senate Budget Committee hearing on the economic and political
crisis in Europe, Conrad said further slowing of the Eurozone economy
would have a “very real impact” on the American economy.

Conrad said American policymakers need to monitor events in Europe
while also focusing on getting the U.S. on a “more sustainable course”
in fiscal policy.

Fred Bergsten, director of the Peterson Institute for International
Economics, said that while Europe is experiencing “multiple, frequently
overlapping and mutually reinforcing crises,” it is possible to
overstate the severity of the situation.

“I believe that these fears are vastly overblown,” Bergsten.

“For all the turmoil, I believe that Europe is well on its way to
completing the original concept of a comprehensive economic and
monetary union and that Europe will indeed emerge from the crisis much
stronger as a result,” he said.

Bergsten said the economic crisis in Europe should be viewed as a
“wakeup call” for American policymakers.

“On realistic current projections, the U.S. deficit and debt
numbers will look as bad in less than ten years than Greece’s did at the
onset of its national nightmare,” he said.

Bergsten said there is “no doubt” that Europe is heading for a
recession.

Simon Johnson, a professor at MIT, took a dimmer view of
developments in the Eurozone.

“I don’t think this will end well,” Johnson said, adding that “deep
recession and austerity” in Europe is near certain.

“That’s the good scenario,” Johnson said.

Johnson said the European Central Bank is “now treading a dangerous
path” as it tries to provide adequate liquidity to avert a financial
collapse without taking steps that lead to a “loss of confidence in the
euro–i.e., a change in market and political sentiment that could lead
to a rapid breakup of the euro area.”

** Market News International Washington Bureau: (202) 371-2121 **

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