More Fodder for the Yank-Haters

The spreading U.S. credit crisis is turning up the heat on Europe's simmering anti-Americanism

Dietmar Bartsch doesn't consider himself anti-American. A basketball fan, the 49-year-old from the East German city of Stralsund just returned from New Orleans, where he caught the NBA All-Star Game. "The people were really friendly," he enthuses. But Bartsch's feelings about the U.S. aren't uniformly warm and fuzzy, and he finds Wall Street's shenanigans especially galling. The big subprime losses at banks "confirm a broad feeling that something's not right," says Bartsch, general secretary of Germany's Left Party, which rode discontent with the global economic order to unexpected success in state elections this winter. "The elites are making decisions that aren't tolerable."

As credit woes endanger the world economy, they're giving Europeans another reason to resent U.S. influence. Anti-Americanism was already simmering because of the Iraq war, dislike for President George W. Bush, and mistrust of rampaging buyout firms. Now, Europe's pundits and politicians are feeding public perceptions that ordinary folks will be left paying the bill for the financial missteps of big banks. "This crisis shows why the market must be regulated. Left to itself, it often produces the worst," says Jean Quatremer, the Brussels correspondent for French daily Libération.

It's always hard to measure the practical impact of anti-Americanism on U.S. businesses abroad. But this latest outburst could have repercussions. For starters, the Continent's distaste for what it sees as the Ellbogengesellschaft, or "elbow society," found anyplace west of the English Channel is aimed squarely at financial fat cats, who do tons of business in Europe and often face off against regulators there. The atmosphere gets even more charged with actions such as the EC's record $1.3 billion fine against Microsoft (MSFT) on Feb. 27.

As popular European attitudes against the American and British brand of capitalism harden, governments may tilt left (it's already happening in Germany) and economic nationalism will get a boost, as it has in France. The resulting backlash could make it harder for U.S. firms to make acquisitions in Europe, and high-risk, high-reward financial products from Wall Street will be ferociously scrutinized. And as Europe's Left uses anti-business sentiment to press for an advantage, it will be much harder for companies to restructure or negotiate globally competitive wages.

In recent years, Europeans have grudgingly accepted U.S.-style reforms as necessary to compete in the global economy. The French elected vocal Americophile Nicolas Sarkozy. Germans in 2003 swallowed cuts in jobless benefits, while for years unions agreed to below-inflation pay hikes. But even as economic growth surged and unemployment plummeted, many people felt the benefits went mostly to the wealthy—who critics say failed to pay their fair share of taxes. Suspicion of the rich runs deep in Europe, where labor leaders and left-leaning politicians still speak the language of class warfare.

Of course, Europe's elites are doing plenty on their own to bring the moneyed classes into disrepute. Many of the tactics that led to the subprime crisis were cooked up in London, and European banks such as UBS were among the most avid buyers of the loans. France has Jérôme Kerviel, the trader blamed for $7 billion in losses at Société Générale. And German police have been raiding the homes of people suspected of hiding assets in Liechtenstein. The cover of the left-leaning weekly Stern features a caricature of the most prominent suspect, former Deutsche Post chief Klaus Zumwinkel, clutching a fistful of euros. "What feeds the Left?" columnist Hans-Ulrich Jörges writes in the magazine. "Capitalism—its excesses, its greed, its shamelessness."

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