The Credit Crunch Crosses the Atlantic | Newsweek The Council on Foreign Relations

DANIEL GROSS | MONEY CULTURE
People Who Live In Glass Häuser
Daniel Gross 10/10/2008 12:00:00 AM
Europe in recent weeks has witnessed the type of anti-U.S. gloating usually seen during the soccer World Cup, the quadrennial event in which the American team is routed in the early rounds. This year, the spectacle of highly paid American bankers falling on their faces is inspiring lectures from afar. The reckless pursuit of profits, a disdain for regulation, manic risk-taking—all characteristics of self-satisfied U.S.-style capitalism—has led to widespread embarrassment. The tsk-tsk-ing reached a new level with a recent cover story in the German newsweekly Der Spiegel: "The banking crisis is upending American dominance of the financial markets and world politics." The piece notes the delicious irony of the United States' having to nationalize parts of its financial system. "The Americans are now paying the price for their pride," it notes. "Gone are the days when the U.S. could go into debt with abandon." Gone, too, are the days of "turbo-capitalism" imposing its mores of "avarice and greed" on the global economy. No wonder schadenfreude—that lovely word meaning joy at other people's suffering—was coined in German.
FINANCE
Luck Of The Wary
William Underhill
There are plenty of headlines touting the latest European victims of the subprime crisis. Earlier this month the Swiss banking veteran Marcus Ospel quit as boss of UBS after watching the bank's market value halve in the past year. Write-downs linked to the dodgy loans were one reason (together with a rogue trading scam) that France's second largest bank, Société Générale, racked up a record fourth-quarter loss of $4.9 billion in 2007. The IMF warned recently that British banks will lose some $40 billion from the current turmoil. In all, North American and Western European banks lost $695 billion in value, more than the entire GDP of the Netherlands, according to new figures from the Boston Consulting Group.
Mail Call: The Darfur Tragedy

Mia Farrow's July 30 interview, "Anger Management," is a cry of the heart —a wounded, angry, shocked heart. It must be heard and heeded. But to expect that governments, any government, can have a change of heart is to expect a concrete wall to break into a beaming smile. It doesn't happen because governments are focused on GDPs and political issues.
Storming The Fortress Of Hidden Terrorist Funds
Rana Foroohar
Even before President George W. Bush unveiled his "most wanted" list of suspected terrorist financiers, bankers around the world were rushing to make sure they weren't holding the wrong moneybags. Accounts had already been frozen in Britain and Switzerland when Germany uncovered a particularly alarming link in late September. German authorities froze an account at the Hamburg Sparkasse bank that belonged to Syrian businessman Marmoun Darkazanli, who publicly admitted that he knew all three of the suspected Sept. 11 hijackers who had lived in Hamburg. Darkazanli also admitted that he has worked for Mamdouh Mahmud Salim, who is in jail awaiting trial in the United States, where authorities believe he is a senior deputy to Osama bin Laden--and possibly his finance chief. Now Darkazanli's import-export business is suspected of being a front for bin Laden's terrorist network Al Qaeda.
Storming The Fortress
Rana Foroohar
Even before President George W. Bush unveiled his "most wanted" list of suspected terrorist financiers last week, bankers around the world were rushing to make sure they weren't holding the wrong money bags. Accounts had already been frozen in Britain and Switzerland when Germany severed a particularly alarming link last week. German authorities froze an account at the Hamburg Sparkasse bank that belonged to Syrian businessman Marmoun Darkazanli, who publicly admitted that he knew all three of the suspected Sept. 11 hijackers who had lived in Hamburg. Darkazanli also admitted that he has worked for Manduh Momoud Salim, who is in jail awaiting trial in the U.S., where authorities believe he is a senior deputy to Osama bin Laden, possibly his finance chief.
Forgiving And Forgetting

When President Clinton announced in Washington last week that the United States would "forgive" all the debt that the world's 36 poorest countries owe to America, he issued a new alarm about the widening cohort of poverty in the developing world. "Simply put, unsustainable debt is helping to keep too many poor countries and poor people in poverty," the president said. Clinton emphasized that almost a third of the world's population lives under the poverty line, earning less than $1 a day. But the debt forgiveness, he added, would be predicated on pledges from developing countries that the money saved would be used to promote health-care and education programs.