Federal Reserve Governor Daniel Tarullo said Europe’s debt crisis poses a threat to the U.S. and world economies as trade shrinks and banks incur losses on European investments.
“A deeper contraction in Europe associated with sharp financial dislocations would have the potential to stall the recovery of the entire global economy, and this scenario would have far more serious consequences for U.S. trade and economic growth,” Tarullo said in testimony prepared for delivery today to House Financial Services subcommittees.
A weeklong selloff in stocks deepened as reports in the U.S. raised doubts about the strength of the economic recovery and leaders in Europe struggled to contain the region’s debt crisis.
The losses pushed the Standard & Poor’s 500 Index down 2.7 percent to 1,084.48 at 11:21 a.m. in New York, a move below the 200-day moving average level that some traders say could trigger more declines. The Stoxx Europe 600 Index plunged 2.8 percent, and the S&P GSCI Index of commodities tumbled to the lowest since October.
Read More:-By Joshua Zumbrun, Bloomberg