In the end, the G-20 summit made some progress. But faced with the opposition of France and Germany, the United States could not persuade its partners to commit to more stimulus. Given the state of elite opinion in Europe today, it's no surprise that President Obama came up short.
The fact is that Old Europe is in a good mood. Unemployment is up, exports are down, industrial production has collapsed--but it doesn't matter. As Victor Hugo wrote, imagining the atmosphere in revolutionary Paris, "Everything was frightening, and no one was frightened."
In place of fear, there's triumphalism. No one likes recessions, but they're easier to swallow when they seem to vindicate your fundamental concept of political economy. And the big meaning of the crisis for Europeans is the vindication of their ideas about how to run an economy.
"I remember the days when American economists came to Germany and told us we had to privatize our community banks, that our small, family-owned industrial companies were not a strength, that we had to move closer to the Anglo-Saxon way of doing business," Jens van Scherpenberg, an economist at the University of Munich who for several years led the Americas unit at the quasi-governmental German Institute of International and Security Affairs, told me. "If someone came here and said that today, the response would be laughter--sarcastic laughter."
Andrea Nahles, vice chair of the German Social Democrats, was asked by a journalist about the US criticism of Germany's reluctance to spend more. "Ach, the USA!" she said. "How many times have I had to listen to our labor-market policies compared with those of Denmark, of Britain, of other countries! And who looks good now? Germany!" Nahles, an important figure on her party's left wing, went on to argue that the United States was simply forced to spend money to save its growing army of unemployed, whereas Germany was putting in place better policies to ensure lifelong training, even for those with jobs. "Simply increasing transfer payments doesn't provide people with opportunity," she sniffed.
In France, Jean-Pierre Jouyet, director of the country's SEC equivalent, told  Le Monde this week that the crisis represents "the revenge of Colbert"--referring not to Comedy Central's Stephen but to Jean-Baptiste, Louis XIV's mercantilist finance minister and the apostle of dirigisme. Jouyet was quoted in an article praising France's system for training the country's elite technocrats--a state-centered approach that has been widely questioned over the past few years, but whose virtues suddenly seem more relevant. "In other countries, people of this quality are in the private sector," explained WTO director (and French Socialist) Pascal Lamy.
Werner Abelshauser, an economic historian at the University of Bielefeld in Germany and a leading expert on differences in transatlantic economic cultures, told me that the crisis gives Europeans "a chance to think about our strengths, to appreciate again the European way of running the economy, which is fundamentally about a banking system based on patient capital and firms that emphasize high-quality products and long-term relationships between suppliers and customers."
Interestingly, Abelshauser argued that this is not about social justice; it's about protecting skilled workers--the source of Europe's competitive strength. He said this is in contrast to the United States, which doesn't have, and never did have, as many skilled workers. "Production systems developed differently in each country," Abelshauser said. "German industrialism always depended on high skill levels--and that was one of the main reasons for the establishment of the first social programs in Germany. It was not just about politics or social justice--it was about taking care of the skilled workers because they were economically valuable." The profile of the US workforce was different, so American industry developed different production processes, ones that were suited to a lack of skilled labor.
Abelshauser argued that it's hard to change these deeply rooted practices; therefore, Europe can't succeed under deregulated finance, since it destroys the stability on which Europe's economy relies. Abelshauser thought a positive outcome of the crisis would be that Europe would return to its proven model of finance.
This is an important point, because it underscores the extent to which the crisis for Europeans is fundamentally about re-establishing a financial system they think serves their interests. Thus the Euro- American debate isn't really about whether to do stimulus or regulation first--it's about whether the United States is going to do regulation at all.
America lacks credibility on this count, partly because Obama has not taken a strong stand against the power of finance in the United States. On the contrary, he plans to use taxpayer dollars to subsidize purchases of "toxic assets"--now renamed "legacy assets." Against that background, the newly stern rhetoric of erstwhile deregulators like Larry Summers is not convincing because it's clear that the Obama administration is not using the collapse to reorganize American banking along healthier lines. Instead, the US position calls to mind a line from Rousseau's Confessions: "I pretended to reproach myself for what I had done, in order to excuse what I was going to do."
The significance of this has not been missed in Europe. Jacques Attali, a key economic wise man in France who has advised both Socialist and conservative governments, told  a business daily, "The bankers [in the United States] are going to accept a minimum of regulation. Not more. We see this clearly with the Geithner plan, which reinforces the mechanisms that led to the crisis.... Besides, do you think it's normal to have taxpayers loaning money to investors so the investors can make profits?" According to Attali, there will be no fundamental change in US behavior on questions like leverage, securitization and debt because "the Anglo-Saxon world lives off that."
The Obama administration has not been perceived as having given any signal to the contrary. As a result, some here want Europe to go it alone. For example, last week's lead essay, by Uwe Jean Hauser, in the august German weekly Die Zeit was headlined "If Necessary, Without Obama." "The argument that the Germans have to do more (on stimulus) because they can still afford it is absurd," wrote Hauser. "The good news is that the Europeans can regulate a lot by themselves. For long enough we've held fast to the mistaken concept, reinforced by the Anglo-Saxons, that world financial markets can only be regulated all together." Instead, according to Hauser, the EU should stop waiting for the United States and simply start requiring regulatory approval "of every new financial instrument." Europe can get away with this because its size means that "foreign investors won't be able to avoid our continent," Hauser wrote.
But unilateral regulation might not work. Ethan Kapstein, an American expert on financial policy who teaches at France's INSEAD business school, explained to me that the Europeans will have a hard time going further than the so-called Anglo-Saxons, since the most exotic parts of the banking industry are in the United States and Britain. "Those two countries are going to drive financial regulation because that's where the big financial centers are. That's where the expertise is," he said. "France and Germany can't do anything about that." As Abelshauser noted, Germany's supposedly safer banking model opened itself up in the 1990s, in part due to its desire to achieve the profits possible in the Anglo-American system. "They were afraid they'd be swallowed by the Americans," he said.
Therein lies the irony of this story: the Europeans might not be serious enough about reining in finance to do it on their own. Given the Obama administration's apparent reluctance to do so, the question then becomes, Who will?