European citizens’ confidence in the economy has fallen to its lowest level in 24 years. Across the world, nations are pouring money into the markets to support banks and businesses, without anyone being able to predict what this will mean in the future for their debt and credit-worthiness. In the United States, beside the shock across all levels of the economy, the state deficit is expected to hit an unprecedented $1.2 trillion this year. Unemployment is on the rise everywhere. The crisis is expected to have grim social consequences in every country. The situation requires radical solutions to prevent a rapid fall in living standards, an increase in poverty and the dangerous rise of political extremism. Last Thursday in Paris, Angela Merkel, the German chancellor, noted another very serious aspect of the crisis: If Western democracies don’t manage to control their deficits and their economies, they will undermine the very model of liberal democracy in the eyes of the rest of the world. «If we cannot prove that as states we are able to create a societal order for the world in which these mechanisms work,» she said, «then questions will come about whether this really is the best system.» In other words, if the prosperous western nations do not control their economies and the fallout that the crisis will have on their societies, they will lose their political clout and stop functioning as reference points – as models – for other countries. The future of the global economy is what is at stake right now. In December, the leaders of the 20 strongest economies met in Washington to discuss the issue. They will meet again on April 2 in London, where newly elected President Barack Obama will be present. At the same conference in Paris that Merkel addressed on the future of capitalism, French President Nicolas Sarkozy warned Obama that the crisis had changed the world. «In the 21st century, there is no longer just one country that says what we should do and think. We will not accept a return to a single way of thought,» he said. Sarkozy’s point was probably redundant: Nearly all countries have been taking similar measures to shore up their economies – throwing state money at the market. America, the Mecca of capitalism, leads the field, with some $2 trillion having gone toward supporting banks and businesses. On Thursday, Obama pressed Congress to move quickly to adopt a program whereby another $775 billion will enter the economy in the next two years through tax cuts and public investments. «We could lose a generation of potential and promise, as more young Americans are forced to forgo dreams of college or the chance to train for the jobs of the future,» Obama said. «And our nation could lose the competitive edge that has served as a foundation for our strength and standing in the world. In short, a bad situation could become dramatically worse.» From the smallest to the biggest economy, all are at risk from the crisis. This demands coordination at an international level and a regulatory system that will succeed the one established in the middle of the past century. It is clear that the globalized economy did not have adequate mechanisms for this, Merkel commented. She proposed the establishment of an «Economic Council» at the United Nations, something like the Security Council, whose decisions will be binding. «Just as we have a charter laying out human rights, we need a charter for international business in the long term,» Merkel said. The aim, she added, is «a social market economy with global dimensions. That is what we are fighting for.» Clearly, Merkel wanted to push the model that combines entrepreneurship with state social policy – a safety net. This is what the «German miracle» of the postwar years was based on. This is what the Lisbon Treaty for a unified Europe promotes. And something similar seems to be the direction most countries have taken in the crisis. At a political level, the Treaty is frozen because of the Irish «no» vote in a referendum last June. But Europe’s economy can still serve as a beacon to the world – if that economy survives.