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Economies worsen in Europe

In this photo illustration a Euro coin and a GBP1 coin are displayed on November 26, 2010 in London, England.

TEXT OF INTERVIEW

JEREMY HOBSON: Just days after Ireland received a financial bailout from the European Union, the debt crisis in the Europe continues to worsen. The U.S. is sending a top Treasury Department official across the Atlantic to keep an eye on things. And the European Central Bank could announce new steps to fight the contagion as soon as tomorrow.

For more let's bring in reporter Christopher Werth in London. Christopher, Good Morning.

CHRISTOPHER WERTH: Good Morning, Jeremy.

HOBSON: So I'm hearing all of a sudden about debt concerns from places like Italy and even Belgium. Is the crisis now moving to what were considered stronger economies?

WERTH: Well, the answer is: Yes. The cost of public borrowing has shot up over the past couple of days. Even Germany, which has the strongest economy in Europe, saw interest rates rise a bit. But what may be most concerning is Portugal, largely considered the next domino to fall. The rating agency Standard & Poor's announced it could make it even more expensive for that country to barrow money.

HOBSON: So things are getting worse in Portugal and across the continent it seems. Are there any new proposals to stop the spread of this crisis?

WERTH: It depends on what you mean by new. European leaders are planning a round of bank stress tests. But I spoke with Graham Turner of GFC Economics here inn London. He reminds us that stress tests were already tried around the time that Greece was bailed out earlier this year.

GRAHAM TURNER: And you know low and behold, here we are in November, December and some of the banks that passed the stress tests have run into trouble. So stress tests simply won't do the trick.

And it's also assumed the European Central Bank will embark on its own round of the bond buying spree the U.S. Federal Reserve began last month. But as you might have guessed, Europe also tried that around the time of Greece's bailout.

HOBSON: Christopher, seems like deja vu all over again. Christopher Werth joining us from London, thanks.

WERTH: Hey, thanks Jeremy.

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