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CBO director: more eurozone turmoil would be 'bad news for US economy'

Congressional Budget Office Director Douglas Elmendorf, at a Monitor breakfast Wednesday, said the challenges Europe faces now are 'larger than ever' and weighing on the US stock market.

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Congressional Budget Office (CBO) Director Douglas Elmendorf testifies on Capitol Hill in Washington, in this October 2011 file photo, before the Joint Select Committee on Deficit Reduction.

J. Scott Applewhite/AP

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Congressional Budget Office (CBO) Director Douglas Elmendorf said he was “quite concerned” about the European debt crisis, noting that it is “unclear” whether the euro can be preserved.

“If European economies slow more than they already have, or especially if there is some greater tumult in the European financial system, that will be bad news for the US economy,” Mr. Elmendorf said Wednesday at a Monitor-hosted breakfast for reporters.

There were signs this week that the European debt crisis, which first affected Greece, was spreading elsewhere on the continent. Borrowing costs for both Italy and Spain rose sharply, indicating lack of investor confidence that the problem can be contained. One key concern is whether Greece will remain in the eurozone after a scheduled June 17 election.

“Although the European governments have managed a succession of times to pull their economies and their financial system back from the brink, the challenges they face are larger than ever now and getting out of their current situation is very difficult, and whether they will be able to preserve the euro I think is unclear,” Elmendorf said.

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