The US has long considered Europe to be the economic equivalent of a doddering old uncle, but this week it was oldster leading whippersnapper America by the hand through the most serious crisis since the Depression. Europe, seeing the need for a sturdier fix than the mortgage-bailout Band-aid Washington proposed, led the charge by investing in its own banks, a move the US followed only after much hand-wringing. But it remains to be seen whether the trend will continue, the New York Times reports.
“Europe showed the capacity to respond to a crisis more quickly than the US,” which “went through agonies to come up with a plan,” said a former European Commission official. The effects were shown in the markets: Europe’s stock exchanges bounced 8.2% this week, while the US saw a more modest 4.5% boost. The key to Europe’s success was its focus on the problem’s roots: not mortgages, but faith in banks.