Financial crises on both sides of the Atlantic are heating up. And in the United States, there is growing concern that President Barack Obama and Congress will be unable to agree on a deal to raise the government's debt ceiling in order to avoid a default on the federal debt.
The Greek financial crisis loomed over Europe for weeks as frequent and sometimes violent demonstrations and strikes took place to protest government spending cuts and tax hikes aimed at averting a default on Greece's massive debt.
Now there are concerns that the debt crisis will spread to Italy and Spain.
And the United States also is struggling with its own financial woes. Its most recent challenge: raising the government's debt ceiling to avoid default.
Already rating agencies are threatening a downgrade of U.S. debt, bad news for European countries and banks that hold more than $700 billion in U.S. treasuries with the Bank of England leading the way, followed by Switzerland and France. A downgrade would diminish the value of those holdings, and could bring massive disruptions in the global financial markets.
Iain Begg is a research fellow at the London School of Economics. He says Europe's problems as well as the problems in the U.S. will have a dramatic impact on the world economy. "It's not so much that the first round effects of either event would be so dramatic. It is that the follow on from it, what you might call the tsunami effect, from the original earthquake would be so dramatic that I think it would derail the recovery and quite possibly pitch the world into a fresh bout of recession," he said.
No matter what the outcome, it will not be easy for either continent to recover, says Begg. "On both sides of the Atlantic, we see this strange kind of the same political economy trying to work out who is responsible; who should jump first; who should bear the pain on any of the solutions, knowing that someone has to bear pain somewhere," he said.
The danger posed by the eurozone's festering debt crisis was highlighted this week as government officials and commercial bankers remained divided over competing policy proposals for rescuing Greece.
The decision is key to in preventing the region's debt crisis from spreading to other countries.
"This sort of contagion is very, very difficult to control," said Stewart Fleming, a research fellow at Chatham House.
He says the EU should move much more aggressively to prevent the financial crisis from damaging the eurozone. "A severe debt crisis would deal a devastating blow to the European economy and would lead almost certainly to the break up of the single currency area. It's that important that Europe gets a control of its sovereign debt," he said.
Regardless of what the outcome in both the United States and Europe, one thing most economists agree upon is that time is running out for containing our modern era's fiscal contagion.