Why America’s credit crunch spells debacle for Europe
Today's Financial News - Posted October 7, 2008
Smug Europeans are gleefully rubbing their hands as America’s financial industry hits rock bottom. But the Schadenfreude may be short-lived: The U.S. credit crunch means lower demand for European imports. And American spending built their economic recoveries… Click here to view!
by J. Christoph Amberger
Baltimore — (TFN): My European friends, Romans, and countrymen are gleefully critiquing the demise of the American financial sector.
It is the smug satisfaction of the well established and risk adverse watching the risk taker and innovator experience a setback. The satisfaction of the rent-paying apartment dweller who watches his ambitious neighbor foreclose on his house.
It’s not just the mortgage debacle and the over-leveraged institutions that serve as a convenient target. In European eyes, the current financial crisis reflects the failure of capitalism and the American way of life… with its unreasonable work weeks… short vacations… seemingly unregulated life… and consumer debt levels.
What they conveniently forget is that it was the American way of life that got them out of the economic wasteland of post-WWII Europe. Even the meager economic revival of the past two years is not due to European thrift and responsible management. Mainly because easy money and easy credit enabled Americans to spend the world out of recession time and time again.
American household debt built China. And American household debt built export Weltmeisters like Germany.
My guess is that the glee will be short lived. Who’s going to buy the Porsches and Volkswagens and Minis… the French wines and Italian loafers when credit dries up and America gets religion?
Europe is counting on China. But with exports withering and debt rising, they may be betting on the wrong horse.
Hopefully, you’re doing the right thing when considering buying a European import in the near future: Maybe it’s indeed high time for us to buy responsibly.
My guess: They won’t be happy about that, either!
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Posted by J. Christoph Amberger · Filed Under Featured Video, Podcast, Politics, Videos
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