Investors and policymakers are starting to worry that the economic crisis in Greece could cross the Atlantic and undermine the U.S. economic recovery, in the same way that U.S. housing woes in 2008 battered Europe.
“What we have seen is that contagion”—economist-speak for a spreading crisis—”has gone global,” says Harvard University economist Jeffrey Frankel.
Early credit-market indicators of contagion to the U.S. aren’t yet flashing red, but investors are keeping a wary eye on them. “This is like we’ve agitated a colony of prairie dogs, and everybody is looking out of their hole to see what’s going on,” said Howard Simons, bond strategist at Bianco Research in Chicago. “But it’s no crisis, yet.”