ARI SHAPIRO, Host:
It's Morning Edition from NPR News. I'm Ari Shapiro.
STEVE INSKEEP, Host:
And I'm Steve Inskeep. This is the first Monday since Congress approved a financial bailout, and the early indications suggest investors are not reassured. Stocks in the U.S. are down sharply. A little while ago the Dow had slipped more than 400 points. And that downward trend followed markets around the world. Japan's Nikkei share average fell to its lowest level in years. Stock markets also declined in Hong Kong and South Korea. And it was a similar story in Europe where investors are worried about their own wave of bank failures. Eleanor Beardsley reports on the spreading crisis and the European response.
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ELEANOR BEARDSLEY: During the weekend, rumors that Germany's fourth largest bank was about to go under dominated the country's news coverage. But on Sunday, the German government, the Central Bundesbank, and private banks agreed on a $68 billion rescue plan for the troubled bank Hypo Real Estate. At the same time, the German government said it would guarantee all private bank accounts. German Chancellor Angela Merkel spoke to reassure the country.
ANGELA MERKEL: (German spoken)
BEARDSLEY: Just last week, Greece and Ireland made the same blanket guarantees, the only other European countries to do so. At the time, Merkel criticized Ireland's unilateral move. So did neighboring Britain where some depositors actually moved their savings to Irish banks. On Saturday, French President Nicolas Sarkozy gathered the leaders of Europe's four largest economies for a meeting in Paris to try to coordinate response to the crisis. The leaders of France, Germany, Britain, and Italy pledged to work together to halt the financial crisis and prevent a Lehman Brothers-type bankruptcy on this side of the Atlantic. And they called for a world summit on the crisis to be held as soon as possible. Host Sarkozy said European values must help a shape a new financial order.
NICOLAS SARKOZY: (Through Translator) It is important that Europe fight for its ideas and values to help bring back confidence. We want capitalism based on entrepreneurs and not speculators. We want morality and transparency. The world needs Europe to show its stability.
BEARDSLEY: Some analysts hailed the weekends' powerful message of returning morality to capitalism while others dismissed the summit as too little too late. The exclusivity of the meeting irritated EU leaders who were not invited, like Europe's fifth-largest economy, Spain. But despite having shared a single market with one currency for nearly a decade, the eurozone has never established the political and regulatory integration that would allow it to face a crisis of such proportions as one. French political analyst Anne-Elisabeth Moutet says sending a message of unity was about the best the leaders could do.
ANNE: I didn't expect them to really sort of take concrete measures, if only because no matter what Mr. Trichet says with the European Central Bank, there are 27 separate countries and 27 separate budgets. And they each will do something slightly different according to how much in debt they are.
BEARDSLEY: That debt turned out to be too much for Belgium. Late last night, in one of the most complicated and spectacular cross-border bank rescues, French bank BNP Paribas took control of the Belgian and Luxembourg businesses of troubled bank Fortis. On Friday, the Netherlands nationalized Fortis' Dutch operations, throwing the Belgian government into a weekend of crisis meetings and causing bitterness between the two Benelux neighbors. Also this weekend, the Icelandic government discussed selling some of its assets overseas in order to bring money home to shore up its banks. Phillippe Dessertine, head of the Paris-based Institute of High Finance, said Europe must coordinate its responses and remain united if it is to provide global leadership on the crisis at a time when America is looking inward.
PHILLIPPE DESSERTINE: We are in a very tough period because of the election in the U.S. It means that there must be another alternative, for instance, for the question of financial crisis. And Europe has maybe to propose some advantages that for instance the United States today cannot offer.
BEARDSLEY: Angela Merkel's go-it-alone decision to guarantee bank deposits has created fissures in the European show of unity. The pressure will be on EU finance ministers to repair the damage as they work this week in Luxembourg to hammer out the details of the weekend agreement. For NPR News, I'm Eleanor Beardsley in Paris.
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