Financial Crisis

European stock markets were holding steady in early-morning trading on Wednesday, Oct. 1, as investors seemed assured that the US Congress would indeed pass a major financial rescue package this week.

But some experts say that the worst may be yet to come.

"A recession is no longer avoidable for the Old World, that is, the US, Europe and Japan," the chief economist at Deutsche Bank Norbert Walter told the Stuttgarter Nachrichten newspaper.

Others, however, warned against being too gloomy.

"We shouldn't call a crisis into existence," the head of the German Chambers of Industry and Commerce, Martin Wansleben, said on a morning magazine program on German state television. "I wouldn't be so quick to talk about a recession."

Wansleben said he expected the German economy to grow by two percent this year, although he acknowledged that orders placed with German businesses were currently declining.

Last week, Ireland became the first EU member state to officially enter recession, and fears are rife that the rest of the bloc, dragged down by the US financial crisis, could follow suit.

Emergency plan?

How hard Europe gets hit by the aftermath of the credit crunch will be determined in part by actions yet to be taken. European political and economic leaders repeated their calls on Wednesday for the US Congress to pass emergency aid legislation.

But they were also discussing what Europe could do to shore up its own economy and financial sector.

French President Nicolas Sarkozy, who also holds the EU's rotating presidency, has called for an emergency summit of world leaders to lay the groundwork for a new global financial system. And the European Commission is set to unveil plans to improve regulation over the financial sector.

Meanwhile, the European Central Bank has said it will continue to provide $50 billion in extra liquidity to ensure that banks in need of short-term loans will be able to get them.

But the ECB is no longer expected to lower prime interest rates, as some had hoped, when it meets on Thursday.

IMF: Get Organized!

The head of the International Monetary Fund, Dominique Strauss-Kahn, has said individual European countries need to better integrate their policies to deal with all the possible outcomes of the crisis.

"They have to organize themselves," Strauss-Kahn told Reuters news agency. "It's urgently necessary… The EU's rules make it harder to act than in the US."

And Strauss-Kahn stressed that the first step would have to be taken by the US Congress.

"An incomplete plan is better than no plan," he said.

The US Senate is scheduled to vote on the rescue package on Wednesday evening. If the Senators approve it, the plan could be put to the House of Representatives the following day.