There are lessons to be learned from the economic crisis in Greece and the turmoil in China’s stock market, said a local economist.

“The primary lesson to draw from the Greece experience and what’s going on in China is that centralized, top-down planning of the economy by the government has been shown to fail over and over again,” said Dr. Daniel J. Smith, associate professor of economics at the Manuel H. Johnson Center for Political Economy at Troy University.

It’s difficult to predict just how each of these crises will affect Americans’ investments and accounts. In the U.S., where stocks suffered big losses on Wednesday, early trading showed gains and reports indicated the Chinese markets were beginning to stabilize.

“The world markets are so interconnected and in such a complex way that it’s hard to predict when an episode like this is going to have a domino effect,” Smith said, adding that he doesn’t think Americans should be immediately concerned. “They should be more concerned about the trends being followed in America.”

Specifically, Smith said, the financial crisis in Greece can be seen a harbinger of what can happen when governments over promise public benefits and don’t have the money to fulfill those promises. In 2012, the Greek government’s expenditures were 59 percent of the GDP, an unsustainable rate, Smith said. By comparison, America’s federal government current expenditures as a percent of GDP are 32 percent and federal debt as a percentage of GDP is now 102 percent, he said.

“We are headed in the same direction with Social Security at the federal level and with pensions at a state level,” Smith said. “Hopefully Americans will take Greece as a wake-up call, before we stuck in quicksand.”

Smith warned that Americans will have to make difficult choices, such as privatizing state benefits and shifting to defined contributions, not defined benefits, for programs like Social Security. “If we don’t change anything, we’re going to have to have higher taxes or reduced benefits,” he said.

And, the Greek government tried to avoid a potentially catastrophic crisis from Europe’s joint currency on Thursday; Smith said the situation illustrates a fundamental problem with the uniform currency and the government’s efforts to control inflation rates.

“Each government is spending more money than it has, and in order to bail them out, the European Union has to print more currency,” he said. “We’ve seen similar situations with the Federal Reserve since its creation in 1913. It often supports government debt by printing more money to keep interest rates low …

“When you keep interest rates low by printing more currency, people over invest. That’s what happened in 2008, when we had an artificial (economic) bubble that eventually popped and created an economic downturn.”

As for market volatility in China, Smith said the slide in prices that caused nearly half the companies to halt trading this week was precipitated by over-investment by the government.

“The Chinese government was investing 40 to 50 percent of its income in the market,” Smith said, adding that healthy markets need to be driven by entrepreneurs and private investors, not the government which “doesn’t always make the best decisions about investments.”

“Overall, it’s another indicator of big government being too involved in the markets,” he said.

The Shanghai composite dropped more than 30 percent since peaking on June 12. While China’s market is largely isolated from other world exchanges, there are worries the financial damage could hurt the broader Chinese economy, which is the second largest in the world.

The bubble began earlier this year, when Chinese economic growth began to slow and investors, acting on advice from state-owned media, began to borrow heavily to buy stocks, taking advantage of margin loans. Rising stock prices encouraged companies to raise money by issuing shares, using proceeds to pay down debt. But the flood of new shares is overwhelming the market and pushing stock prices lower. In effort to stabilize the market, 21 Chinese brokerages created a $19 billion market stabilization fund and began buying Chinese stocks over the weekend, but that move did little to slow the sell-off. By Thursday, more than half the companies trading on the market suspended trading and the Chinese market began to rebound slightly.

The Associated Press contributed to this report.