Here’s How Europeans Are Reacting to the Shutdown’s End
Many Europeans have echoed sentiments from around the world by praising the government of the United States for coming to a deal to avoid a debt default. With the U.S. government having shutdown since the beginning of this month — effectively laying off hundreds of thousands of non-essential employees — many overseas had expressed concerns that the happenings in America would negatively impact the rest of the world. This was seen in many stock markets, where gains were mediated and losses worsened by the uncertainty regarding the shutdown.
What was of paramount concern to many European officials was a potential default of U.S. government debt. Such a default, and any downgrading of credit ratings that would accompany the move, would cause turmoil in the world bond markets. Since many borrowing rates are tied — directly or indirectly — to U.S. treasury bond rates, an increase in U.S. bond yields would mean that countries around the world would have to pay more to borrow money.
This would be especially crippling for countries such as Greece, Portugal, and Ireland, all of whom are looking to re-enter international bond markets after being shut out during the recent bailouts.
Officials at the International Monetary Fund, including the fund’s chief, Christine Lagarde, and its top economist, Olivier Blanchard, had repeatedly expressed concerns over the possibility of a U.S. default, claiming that raising the debt ceiling quickly was of the utmost importance. They are sure to be happy that a deal was reached at the last minute, even if the issue has only been forestalled by a couple of months.
Meanwhile, European bankers couldn’t help but feel a little bit of satisfaction as the Americans struggled. With the spotlight usually on European debt and European political gridlock, few were complaining that it was the Americans who were receiving the lion’s share of the media’s and the public’s ire for a change.
There was a even a new word coined to express such a sentiment — shutdownfraude. Coming from the German schadenfreude, which is the feeling of satisfaction over the misfortune of others, the term encompasses the host of smiles and sniggers exchanged by German bankers while at an annual conference in Brussels earlier this week, as well as the hint of condescension in European leaders as they have expressed disdain at America’s fiscal woes. It’s a humorous, but none the less cynical reminder that relations across the Atlantic contain a drop of rivalry in the ocean of friendship.