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Economic issues overseas drag down U.S. stock market

Michael Tucker, professor of Finance at Fairfield University, emphasizes that the Greek debt crisis poses a serious threat to the stability of this country’s economy. Not to pile on the bad news, but the economies of Spain, Portugal, Italy and Ireland are also sucking wind, which could drag the European Union into a deeper recession. “The Greek debt crisis is a serious issue,” Tucker said. “Several European banks hold large chunks of the Greek debt. If it defaults that could be a bad situation for Europe and us. The influence of events elsewhere are correlated and connected to us, too.”

Philip Lane, professor of Economics at Fairfield University, sees no apparent signs of a stock market crash on the horizon, but warns that it would be foolish to assume that the worst has passed and investors should rush in to reap large payoffs. “I see no signs of a big crash,” Lane said. “Some pundits are talking about a double-dip recession. The bailout in Greece should bring stability, but it’s not a fix. The Greeks need to fix their economy. Retirement age there is somewhere in the 50s and the government struggles to collect taxes. The system isn’t working.”

Published in Fairfield and Westport Minuteman on 5/13/10

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