US bailout: A superpower in decline?

Will America lose its status as the world’s financial superpower?

There’s obviously a lot resting on President Bush’s Thursday afternoon meeting with congressional leaders – including Barack Obama and John McCain – to hammer out the bank rescue deal. Markets tiptoed through the day here like a heroine in a horror film waiting for the ax to fall.

But those perfidious Europeans are daring to suggest that whatever and whenever the deal, it’s all over for the American financial superpower, which has dominated the global economic landscape for 50 years, if not more.

“The world will never be as it was before the crisis,” German Finance Minister Peer Steinbrueck ventured today. “The United States will lose its superpower status in the world financial system. The world financial system will become more multipolar.”

All of which would be great for Europe. If only it wasn’t so dependent on the US export market. And if only the London, Paris, and Frankfurt stock markets didn’t follow Wall Street’s every move.

Meanwhile, Europe is pooh-poohing suggestions of needing a bailout of its own.

Joaquin Almunia, the European Commissioner for Economic and Monetary Policy in Brussels, is convinced the situation this side of the pond is very different, according to several newswires and the BBC.

"The situation we face here in Europe is less acute, and member states do not at this point consider that a US-style plan is needed," he said.

French banks are particularly sanguine, the big two insisting Thursday that they are sitting pretty.

“We see a lot of opportunities,” said Société Générale’s deputy chief executive Severin Cabannes. “We're taking opportunities on the market.” Perhaps an unfortunate choice of words from the bank that took a 5 billion euro hit from a rogue trader last year.

Rich men, camels, and eyes of needles

It’s not the job of this blog to pass judgment on those who sold dodgy derivatives or drove banks to the wall last week. We’ll leave that to men of the cloth.

At the Church of England, they’re not pleased. Writing in the Spectator, the Archbishop of Canterbury, Rowan Williams, said it was time to make financiers play by the same rules as the rest of us.

“It is no use pretending that the financial world can maintain indefinitely the degree of exemption from scrutiny and regulation that it has got used to,” Dr. Williams wrote.

The Archbishop of York John Sentamu was even more scathing, calling short-sellers “bank robbers.” “We find ourselves in a market system which seems to have taken its rules of trade from Alice in Wonderland,” he said.

That, one presumes, would make the proceedings on Capitol Hill the Mad Hatter’s Tea Party.