How the world’s top economies see the financial crisis

Capitol Hill seemed like the center of the universe last night as U.S. senators scrambled to save U.S. workers, students, and Joe Sixpack from financial disaster. But what about the other constituents of America’s economic domain? I’m talking about other countries. How have they reacted to this spiraling crisis? Let’s take a look at a few major players:

I use a 1-5 scale to indicate how urgent the crisis is for a country — 1 means not at all concerned, and 5 represents hair-on-fire panic.

Japan (3)

Japanese Finance Minister Shoichi Nakagawa is not worried:

I understand that the impact (of the financial crisis) on the Japanese economy is very small compared to that in the U.S. and Europe," Nakagawa said. "I expect the Japanese markets to undergo a thorough risk analysis and act calmly."

While the government of the world’s No.2 economy is closely monitoring the situation and does urge swift approval of a bailout by the U.S. Congress, some also believe the crisis is a golden opportunity for Japanese banks to expand their international influence. Nomura Holdings has already picked up Lehman Brothers’ Asia operations and Mitsubishi UFJ Financial Group is slated to become Morgan Stanley’s largest shareholder. Japanese banks will probably be on the prowl for more good deals.

Continental Europe (4)

There would be something comical, even pleasurable, in watching the frenetic agitation of the banking world," wrote Laurent Joffrin, editor of Libération newspaper, “if millions of jobs were not at stake, not to mention the economic balance of the planet.

"Schadenfreude" is on everyone’s lips, of course in Germany, but especially in France, as the above comments, quoted by The Economist, show. Sentiments are deeply conflicted though. Political leaders feel vindicated about the misgivings they’ve held about "Anglo-Saxon" free markets, but are struggling to contain knock-on effects from the U.S. crisis since European markets are so tightly intertwined with those of the United States.

For French President Nicolas Sarkozy, "the idea that markets are always right was a mad idea." But he has personally striven to promote more competition in France and is likely to pursue regulatory reform, rather than a rollback of market liberalizations.

"The U.S. will lose its status as the superpower of the global financial system." This is the view of German Finance Minister Peer Steinbrück, who gave an "impassioned" speech at the Bundestag last week denouncing American greed and regulatory failures. Major German newspapers are guarded, though. Some accuse Steinbrück of using the United States as a scapegoat for Germany’s slowing economy and most are generally supprotive of swift action by both U.S. and German politicians.

Britain (5)

With a string of bank failures, a gummed up credit market, and housing woes of their own, British authorities are moving to ensure financial stability at home, but are also looking to Washington for leadership. Deposit insurance has been upped from £35,000 to £50,000. David Cameron, the opposition leader, ended his attacks on Labour’s economic policies and vowed that American-style partisan strife would not catch on across the pond.

China (3)

Chinese Premier Wen Jiabao says he’s very "concerned" about the U.S. crisis and that China should "make a foothold in expanding domestic demand." Since China’s economy relies so much on exports, its growth rate could take a hit if demand from U.S. consumers slows. Not to mention the sizeable stakes its sovereign wealth fund has in Blackstone, the $119 billion private equity fund, and (former) investment bank Morgan Stanley. So, there’s one reason why the Chinese government may be very interested in a bailout of U.S. financial firms.

All of these countries are eagerly waiting to see if the proposed U.S. bailout will pass the House this week. Whether the U.S. financial juggernaut can stage a comeback and lend some degree of stability to markets will have a huge impact on how countries around the world proceed.