European woes could be dire for US: IMF's Lagarde

Europe's economic problems, if not addressed, could lead to "major" consequences in the United States due to strong linkage between the two huge economies, IMF chief Christine Lagarde said in an interview broadcast Sunday. "Letting Europe down is going to mean, if it was to happen, major consequences and negative consequences on many other economies, including the United States of America," Lagarde told the CBS program "60 Minutes." "Twenty percent of US exports go to Europe. There is a very strong linkage between US banks and European banks. There are plenty of European employees that are employed by US companies, and there are plenty of US employees that are employed by European companies." Lagarde's comments come with Americans skeptical about aid to the troubled eurozone. A law passed in 2010 bars Washington from supporting an IMF bailout unlikely to be repaid, with the Greek crisis foremost in the minds of lawmakers. The IMF managing director, who took over after the resignation of French compatriot Dominique Strauss-Kahn earlier this year, said the IMF must play the role of the firefighter in the global economy. "It's a fire brigade sometimes when there is a crisis," she said. "You know, we try to put out the fire. And we do so with rules and funds available that are always paid back." Lagarde said the current problems are a "continuum of 2008," when global markets collapsed. "Let's face it. It's the same process that is unfolding before our eyes." But she said she is "reasonably optimistic, and sometimes desperately optimistic" that "countries will understand that they can actually change... the course of things." She said that in the United States, her biggest worry is "political bickering" in efforts to reduce the budget deficit. "Certainly I would hope that on a bipartisan basis both Democrats and Republicans can come to terms in their supercommittee," which she said would offer "a degree of certainty that is so much needed for markets."