Europe Debt Crisis Could Imperil Global Economy

WASHINGTON (AP) — If the U.S. economic slowdown weren’t enough to deal with, the Federal Reserve this week must consider a new threat: a resurgent European debt crisis that could imperil the global economy.

Financial markets have been gripped by fears that Greece will default on its debt and infect other economies. Those worries eased over the weekend as prospects for a rescue appeared to brighten. Still, the crisis has renewed fears that a Greek default could derail a still fragile economy in the United States and elsewhere.

When they meet Tuesday and Wednesday, Fed officials will likely discuss what to do to help shield the U.S. economy if Europe’s crisis worsened. A Greek default would rattle global markets. Some analysts suggest that a panic would cause the Fed to intervene as it did during the 2008 financial crisis, when it lent billions to banks.

Even before Greece’s crisis flared anew, the Fed was concerned about what Chairman Ben Bernanke this month called a “frustratingly slow” U.S. economy. The slowdown is sure to seize much of the Fed’s attention this week.

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