WASHINGTON -- Another major crisis could be brewing in the world economy. This time, the trouble is starting in Europe.
Analysts are worried that the problems with Greece and other countries could drag down the European economy - and that could hurt America as well.
Gloomy Economic Forecast
The latest volcanic eruption in Iceland perhaps paints a picture of what could in store for some economies across Europe: a meltdown.
Stocks in Asia tumbled in early trading Monday over worries that the debt crisis in countries like Greece, Portugal and Spain could spill over to the rest of the continent.
Those concerns caused European stocks and bank shares to tank last week, sending the euro to a nearly four-year low against the dollar. Worries about a weak economy in Europe sent oil prices temporarily below $70 a barrel.
The turbulence comes after the European Union and the International Monetary Fund approved a $136 billion bailout package to help Greece out of its debt crisis. That comes on top of a $1 trillion rescue package to protect the euro - a move that was made to safeguard the 16-member nations' common currency.
However, German Chancellor Angela Merkel says those actions won't solve the problem. They will only buy some time to make the necessary fixes.
But even the more stable European economies, like Germany and France, are prone to the same problems because of their own debt and because they hold a lot of bonds from countries such as Greece and Spain.
Analysts say it's a scenario that could ricochet throughout the global banking system.
Implications for America
And some worry that the U.S. could find itself in the same situation as its European counterparts with the growing national deficit.
"We are seeing in Europe today what happens when debt spirals out of control, how it shakes the confidence of consumers, manufacturers, and small businesses, and how it creates an insurmountable obstacle to economic recovery," Rep. Chris Lee, R-N.Y., said.
The cause of all this is too much government debt. A new report by the IMF warns that "high levels of public debt could weigh on economic growth for years" to come.