I thought I would never read a headline like this in an Anglo-American newspaper. It was the headline for the "European View" column by Paul Betts in the Financial Times on Tuesday:

In the past 48 hours, various European countries have scrambled to put together bail-out packages for troubled financial institutions in Germany, the UK, France, Belgium, Ireland and Iceland. And while this is by no means the end of the story, it has demonstrated that the European authorities and individual national governments can move very quickly to try to stem a growing crisis of confidence in the European financial system.

In the past 10 days, the conventional wisdom was that Europe would never be in a position to act as swiftly to rescue its financial industry with a comprehensive plan such as Washington's $700bn (?498bn) troubled asset relief programme. Yet the plan has yet to be approved, with all the political modifications demanded by US lawmakers. No evidence has so far emerged that Europe will need to orchestrate a similar plan of such magnitude.

Of course, as Peer Steinbrück, Germany's finance minister, has noted, Europe is not so much seeing a little light at the end of the tunnel but rather the headlights of an oncoming train.

Telegraph:

The psychology of global markets has shifted hugely over recent days as it becomes clear that Europe, Australasia and parts of Asia are sliding into recession. The US dollar has launched its best rally in half a decade, reflecting a recognition that half the world is in even worse shape than the US. In fact, America is the only G7 country to eke out modest growth this summer.

The G8 used to be criticized as an evil capitalist group of powerful countries that determines world politics and economics without legitimacy like the UN. There has not been much of such criticism at this year's summit in Japan.

This time, lack of effectiveness was the most common criticism. The G8 is increasingly seen as a Western talking shop that is doing photo-ops with rock stars and third world leaders, but fails to act on its past promises on development aid and is increasingly incapable to shape international economic affairs.

Besides, Senators McCain and Obama recently had a dispute as to whether Russia should be excluded from the Group of Eight.

Consequently, there have been several reform proposals to make the G8 more effective:

L20: upgrade the existing G20
G13: G8 + the "outreach 5"
G9: leading market democracies
G3: US, EU & China
G3: US, EU & Japan

The Atlantic Community explains these proposals and asks: "Should the G8 be enlarged to include new major international players or contracted to ensure effectiveness?" If you register on Atlantic Community, then you can vote on the above options.

InformationWeek:

London may be eclipsing Wall Street as the world financial capital, and the euro is trouncing the dollar, but Europe has yet to prove the equal of the United States in technological innovation.

Author and engineer Hervé Lebret thinks he knows why. "There is a risk culture that's missing. We don't have an environment to be more ambitious and risk-taking." His book, Start-Up: What We Can Learn from Silicon Valley, argues that Europeans need to recognize the value of risk -- and failure. "In the U.S. it's not that people like failure, but it's seen as a way to learn," he says. "In Europe, if you fail you aren't given a second chance to try again. So it's viewed very differently."

Sounds familar. See "Germany's Innovation Dilemma" on Atlantic Community.

Deutsche Bank got a lot of negative press coverage in the United States. David Vickrey, who used to work on corporate finance transactions at Deutsche Bank Securiites and Barclays Capital, has written extensively in his blog Dialog International about the involvement of German banks in the US mortgage crisis. Here are a couple of posts in chronological order (latest on top):

Karma and Bad Times for Deutsche Bank in America (April 27, 2008)

Greed and Fear: US Subprime Crisis Takes Its Toll in Germany (April 9, 2008)

The Subprime Crisis Leads to Mad Mergers in Germany (April 1, 2008)

German Government: Please Sue Deutsche Bank (March 10, 2008)

Deutsche Bank: America's Foreclosure King (January 24, 2008)

German Bundesbankers expect a gradual slowdown of the economy as a result of weaker global growth, higher oil prices and a stronger euro. They are not concerned about any direct fallout from the US mortgage crisis, writes Ralph Atkins in the Financial Times.

The article's headline is "Schadenfreude stirs in resilient Germany," but Atkins only claims once that "across Germany, a sense of schadenfreude has even started to emerge." His only indication is that "Peer Steinbrück, finance minister, has long maintained that a run on a bank, as seen with Northern Rock in the UK, would not happen in Germany." Well, many Germans are scared about their jobs and worry about poverty in their later retirement. Many are so concerned about the financial markets that they do not invest their savings, but keep them on a bank account with low interest, which is bad for retirement plans and for the economy. That's why the finance minister tries to reassure the public. That's not Schadenfreude. Perhaps the folks at the Financial Times felt compelled to use a German word in their headline. Next time write "Blitzkrieg" or "Kindergarten" or address people as "Herr Steinbrück" rather than "Mr. Steinbrück" (a weird habit of some).

Otherwise the article is good and describes what has been going on:

Germany's recent economic history has been the mirror image of the US's. Instead of enjoying a consumer and housing boom over the past decade, Germany has experienced a period of painful adjustment to the costs of reunification in the early 1990s and the effects of globalisation on a high-wage economy. By the time the global financial crisis struck, extensive private-sector restructuring had restored cost competitiveness, while consumers had retrenched financially - with house prices flat or even falling. The result was an economy driven not by consumer spending but by its powerful export motor, with industry producing high-quality goods that appear relatively insensitive to the higher exchange rate. 

Atkins ends with an FT typical conclusion:

But that is not the same as saying Germany has the better long-term prospects. Whereas the US's financial system and more flexible labour markets appear to booms and busts, Germany's economic growth rates traditionally remain steadier - but lower.