One small but significant phenomenon occurring in the current economic environment has been the reluctance of European nations to engage in the level of spending that Obama has been proposing for the US. The US media has not noticed or commented on this in any detail, but it shows a growing divide on the correct policy going forward.
However, foreign media has caught on to the issue and mentioned it. An article I found today in the English web page of a Czech news organization noted a recent appearance of their prime minister at a European Parliament meeting:
Czech Prime Minister Mirek Topolanek, whose country is holding the EU presidency, in the European Parliament sharply criticised the measures taken by the USA to fight the economic downturn, saying huge financial injections in the economy are a road to hell.
The article only confirms previous articles I have read which have indicated that other than the UK, no European nation has engaged in a large level of stimulus spending. There have been a few US media comments that Obama plans on using the G-20 meeting in early April to complain about the lack of spending in Europe. However, it will probably be a very hard sell. The Czech article notes:
"We need to read textbooks on history which are already covered with dust. The road selected by the USA has discredited itself historically," Topolanek said.
With that it's clear that no support for the current Obama budget proposal and its high deficits will come from Europe. I've already noted that China has stated quite clearly that they will not be supporting the dollar through purchases of T-bills. China does plan to invest heavily in stimulating their own economy, but that spending will actually reduce the funds they have available to purchase T-bills, and will likely reinforce their current decision to allow the dollar to devalue.
The situation is not one that supports the economic policy coming from the White House, but I do see a silver lining in this. Europe has been hurt by the crisis, with banks in both Ireland and England taking heavy losses and the nation of Iceland becoming bankrupt after the two largest banks in the nation became insolvent due to overexposure to bad investments. However, the creation of derivatives and other paper assets was largely concentrated in New York and London, and while no nation in Europe will avoid pain, the damage looks to be far more limited. Growth and recovery for their economies is unlikely to be fast due to the bureaucratic restrictions that overlay markets in Europe, but the foundation for that recovery is far more secure. I expect that Germany will show the recovery far earlier than the US, and it will be slow but steady.
The economic destruction that has been following this downturn has not finished, but the fact that the leaders in Europe are willing to stand firm against panicked spending and work on keeping their economies and currencies stable is a promising sign. They see the recovery as not only possible, but inevitable and are willing to allow the markets to clear out the toxic assets naturally.
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