Berlin - First came denial, then outrage, and finally, as the breadth of the financial crisis sank in, frenzied attempts to limit the damage.
The turmoil that sent shockwaves around the world last month has presented Europe's politicians with formidable challenges and their responses have been at once forceful and flawed.
A look at their reactions to the upheaval that erupted in mid-September after the shock bankruptcy of US investment bank
Lehman Brothers, suggests many were slow to realise the scope of
crisis and the speed with which it would spread across the
Atlantic and wreak havoc closer to home.
It took some leaders, like French President Nicolas Sarkozy, the better part of a week to speak out on the financial woes that sent global stock markets careening lower.
Once "Sarko" engaged, however, he moved quickly to coordinate with his European partners and played a lead role in arranging a bailout of Franco-Belgian bank Dexia.
Others, like German Chancellor Angela Merkel and her Finance
Minister Peer Steinbrueck, reacted swiftly to market gyrations,
but played down the impact of the crisis in its first week.
Both were quick to blame the turbulence on the United States, Britain and their "Anglo-Saxon" capitalist model.
Based on their public statements, Berlin appears to have
underestimated the consequences of the turmoil for Germany,
sending reassuring signals about the stability of domestic banks
late last week before scrambling to inject of billions of euros
into troubled lender Hypo Real Estate.
"It is hard to blame the politicians for their handling of the crisis, which I think has been sound in an environment that is evolving very quickly," Norbert Walter, chief economist at
Deutsche Bank, said.
"What you can fault them for is their rhetoric, which has
sometimes been out of step with their actions, a tad populist
and in some cases counterproductive."
Brown benefits
Described by some European politicians as an American problem when it shook venerable US financial institutions like Lehman, AIG, Merrill Lynch, Morgan Stanley and Goldman Sachs two weeks ago, the turmoil has now hit Europe with a vengeance.
In addition to Hypo Real Estate and Dexia, governments have been forced to intervene to save Belgian-Dutch financial group Fortis and British mortgage lenders HBOS and Bradford & Bingley.
British Prime Minister Gordon Brown, like Sarkozy a former finance minister, has looked more assured than most leaders and
is one of the few to receive a political boost because of his
handling of the crisis.
Brown was accused of dithering last year when mortgage bank
Northern Rock fell victim to the credit crunch, but his response
to the latest wave of turbulence has been swift.
Brown denounced "irresponsible behaviour" in financial markets in the days after the Lehman collapse, put forward proposals for a global regulatory system at the United Nations and saw his poll ratings rise after a rousing speech to a Labour Party conference in Manchester.
He played an active role in brokering a rescue takeover of HBOS by Lloyds last month and his government stepped in quickly last weekend to nationalise parts of Bradford & Bingley.
Sarkozy, who holds the rotating presidency of the European Union, has been just as active over the past week, joining a 5 AM meeting on Tuesday to seal the Dexia bailout and arranging an EU crisis summit for Saturday.
But his rhetoric has sometimes sounded sensational - he has vowed to punish the culprits behind the crisis and rebuild a
"crazy" financial system "from scratch". And his government has
had to fend off allegations its initial reaction was slow.
"If there was a delay, there was a delay in a lot of other places too," his European Affairs minister Jean-Pierre Jouyet
told France-Inter radio on Wednesday.
"Hyperbolic froth"
In contrast to both Brown and Sarkozy, Merkel has left much of the nuts and bolts work to Steinbrueck, whose speech last
Thursday contained some of the boldest US-bashing to date.
"The United States will lose its superpower status in the world financial system," Steinbrueck told the lower house of parliament, calling the crisis "above all an American problem."
Charles Grant, director of the Centre for European Reform in
London, said he feared such "hyperbolic froth" would fuel a
damaging backlash against the very system that has ensured
European economic prosperity for decades.
"Anglo-Saxon capitalism has its flaws, mistakes were made and there is truth to the criticism, but rhetoric like this can have a dangerous knock-on effect on future policy," he said.
Outside of Europe's big three - Britain, France and Germany - the response and impact of the crisis has been as varied as the countries themselves.
Italy has been pre-occupied with domestic issues like troubled airline Alitalia and smug about the stability of its old-fashioned banking system, although its second-largest bank
Unicredit has come under pressure in recent days.
In Belgium, the 6-month old government of Prime Minister Yves Leterme appears to have finally won legitimacy for its leadership in the Dexia and Fortis deals.
"Fortis, Dexia: Leterme government finally exists!" La Libre
Belgique newspaper proclaimed on Wednesday.
- Reuters