Concern over the subprime mess is not just isolated to the US markets of course. Shaking news out of the US on housing and jobs, also had Europe's major indices falling sharply. The London FT100 down nearly 3% just in the last week. The next big question of course will the subprime blowup in the United States rein in the strong growth we’ve been seeing overseas as the ripple effects continue. This weekend, I had a chance to sit down with the president of the European Central Bank Jean Claude, Trichet, in an exclusive interview. I got his thoughts on that as well as the health of the overall European economy.

...you have Europe today?

I would say our present analysis is that our baseline scenario continues to call for a European economy growing around potential. But I also said on behalf of the governing council that uncertainties had augmented because of the effects that we have observed over the last weeks and days. And so we have this combination of the baseline scenario, growth around potential and uncertainties augmenting significantly.

And final question is many people are wondering if the housing issue in the US will rein in the European economy because the European economy has been growing so strongly.

Well, we will see what happens again, as I said, uncertainties have augmented whether or not the global economy itself which is as you know very dynamic with emerging countries continuing to be very dynamic, emerging in Asia, in particular, but not only emerging in Asia. So how would the combination of what happens in the US and the rest of the world being in a dynamic state presently, how would this three combine, we would see again, baseline scenario, growth around potential, uncertainties are widening.

And Mr. Trichet also spoke to me about his former counterpart, former federal reserve chairman Alan Greenspan. We will have more of that interview with Jean Claude, Trichet about Alan Greenspan. Later on in the week and then on Monday...

Notes:

FT100: The Financial Times Index of 100 industrials

Baseline scenario: The Baseline Scenario is a projection of future community, economic and physical development trends.