Europe: From Schadenfreude to Panic

The initial reaction of Western Europe to the collapse of leading American banks and financial markets was one of Schadenfreude. Finally, most commentators and even politicians seemed to believe, justice. Americans talked about the blessings of capitalism all those years, now look at them. "We were right [to give the government more power], they were wrong."

Germany even went so far as to say that the crisis was a sign that American hegemony had come to an end. The United States, German politicians said, would never be able to recover from this crisis, at least not without greatly limiting the freedom of the markets.

After the crisis persisted, however, and the United States government made clear that the impact of the crisis in the financial markets would be bigger than most expected, the tone started to change in Europe. Suddenly, European conservatives started to point out that the crisis wasn't a typical American problem: The problem would spread to Europe; our economies already refused to grow significantly.

Then, more American banks collapsed, and European banks – such as Fortis – made clear they had severe problems as well. Europe’s attitude continued to change from Schadenfreude to concern. What if those conservative analysts were correct? What if this problem was bigger than the States?

Dutch conservative magazine Elsevier took the lead in attempting to educate the public at large. When progressive journalists were still celebrating the demise of the United States economy, Elsevier took a look at European economies and concluded that they would follow. Our economies, Elsevier argued, are intertwined. If one collapses, the others are also in trouble.

Besides, Elsevier opined in its September 20 edition, the current crisis has more to do with greed and careless consumers than with capitalism; socialist economies had and have the same problems, and then a couple more. The U.S. may be in trouble now, but if we look at our situation in Europe, according to Elsevier, you cannot possibly be thrilled about our economic future either.

Slowly but surely conservative magazines and commentators started to reach progressive European politicians. They too grew increasingly concerned and are now calling on the U.S. government to intervene. U.S. Congress should, European politicians said this week, pass a law as quickly as possible that would enable the federal government to bail out the banks in trouble; if not, the crisis would spread and European companies and banks would face the same problems American banks face now.

European investors, first quoted in newspapers like Der Spiegel, The Guardian, De Pers, de Volkskrant and Trouw, changed their tune. Something had to happen, they have now concluded. If the U.S. does not act, it won't be just the 'capitalist' US economy that will collapse, so-called stronger and better regulated 'moderate socialist' economies are feared to follow suit.

Instead of Schadenfreude, a growing sense of urgency has now taken hold in Europe. It is clear to virtually everyone that the American government has to act. European news channels and newspapers are reporting on the negotiations taking place in Washington, between Bush administration officials and Democratic and Republican leaders, on a daily basis – often even several times per broadcast or edition.

Where they made fun of the panicking American politicians first, they are now wondering why it is that these politicians cannot seem to agree on a deal. It was entertaining and all when there was enough time to do something, now that time has almost run out – and European analysts tend to believe that time is running out rather rapidly; the consensus is that a plan has to pass early this week – Europeans are panicking themselves.

"What's taking them so long, why can't they agree on a plan?", virtually every journalist – including on BBC and NOS Journal – asked last week. Isn't the solution simple? More government regulation and government control. Nationalize the banks, invest in other industries. Let the government deal with the market's problems.

Slowly but surely, however, they are starting to understand that the problem is more complicated than that. More government control of the market won't solve all the problems. After all, European governments have been regulating markets for decades, to no avail.

It is clear, however, that something has to happen. European politicians and journalists are increasingly concerned, arguing that something needs to happen. Get a law passed; bicker about the details later — that is the general view. After that, European governments will have to enact their own laws in order to limit the damage at home. After all, Europe may face the problems later than America, but it will face them eventually.

For now, the prevailing attitude in Europe is that America has to act now. Anger towards the House of Representatives is especially visible whenever the issue is brought up. The short-term answer is the nationalization of banks and other financial institutions, along with a major investment in the U.S. economy. Afterward, these financial institutions should slowly but surely regain their freedom … but not too much freedom.

After all, Europeans will be Europeans, even when they know better.