In short, the Atlantic Alliance (better known as NATO) should be replaced by something broader and more vague that gives Russia that same privileged role at the European table that the United States has long enjoyed. And to rub the point home, Medvedev told his enchanted audience in Berlin that the reconciliation between Russia and Germany was "just as important for the peaceful future of Europe" as the post-1960 reconciliation between France and Germany.

A lame duck American president still bearing the scars of the Iraq War can hardly compete with a fresh-faced young Russian president ("a new Gorbachev," enthused one German commentator) talking of peace and love and mutual investments.

The second irony was that Bush arrived just as it emerged that European banks have suffered more from America's poisonous financial export of subprime loans than their U.S.-based rivals.

The Institute of International Finance reported last week that European banks have been hit by $200 billion in credit losses from the $387 billion lost so far, while U.S. banks have lost $166 billion. Moreover, the U.S. banks have done a rather more serious job of raising new capital to shore up their balance sheets, $141 billion against $25.5 billion by the European banks.

So President Bush might be forgiven if he harbored some private thoughts at his summit with EU leaders in Slovenia this week that the clever American banks managed to ditch those toxic bundles of dodgy mortgage loans, and the foolish European bankers were so gullible as to take them.

If so, Bush would be wrong. First, the Europeans can manage those losses because the value of the dollar has fallen on Bush's watch by almost half. It used to take just $0.84 to buy a euro; now it takes $1.56. Given the fall in the value of the U.S. currency, the real loss to the European banks is about 20 percent to 30 percent less than it looks.

Second, Bush has presided over a historic shift of American wealth and financial influence to other countries. Most U.S. commentators focus on China, but the real beneficiary of the Bush era has been Europe, whose share of world exports has risen from 40.8 percent in the year 2000 to 42.1 percent in 2006.

During the Bush presidency the European Union has become the world's largest economy. The EU now has a GDP of some $16 trillion, about 10 percent larger (at least in dollar terms) than the GDP of the United States.

Europe accounts for 64 percent of global foreign direct investment outflows and almost 50 percent of inflows. Some of those European investments are doing very well in the United States, where Europeans are overwhelmingly the largest foreign investors, their presence jumping from $332 billion in 1995 to $1.31 trillion in 2006. Earnings of European-owned affiliates in the United States have risen six-fold in the past five years, to $89 billion a year.

Despite the sneers by Bush administration officials at the rigid European labor markets and higher European unemployment, Europe added 3 million new jobs in 2006, while the United States added just 2.3 million. And while on paper the U.S. unemployment level of 5.2 percent might look better than the European Union average of 8.2 percent, factor in the 2.3 million Americans in prisons and the unemployment figures level out. The EU prison population is just over 360,000. The U.S. incarceration rate is 762 per 100,000 people, nine times higher than Germany's rate of 88 per 100,000.

Europe has big problems, to be sure. It is more dependent on energy imports than the United States, and its demographic profile does not bode well for the future. Europe's population is going to shrink and to age in this century, while the U.S. population is going to grow. Europe does a rather worse job of integrating its growing Muslim minority than the United States does of integrating its own immigrant population (the legal ones, at least).

Moreover, Europe does not score nearly as well as the United States on the three separate dimensions of power. The United States is a military superpower, an economic superpower and a cultural superpower, with a vast and subtle and subversive influence that stems from its constitutional principles as well as from Hollywood. Europe, so far at least, is just an economic superpower with some pretensions to cultural influence and a lot of fine museums and old churches. Militarily, despite the French and British nuclear arsenals, it barely counts.

Bush understands this, which is why he finds it a challenge to take Europe seriously. He is not alone in this. President Bill Clinton used to wonder why he had to meet so many officials from Luxembourg, with a population smaller than that of Washington, simply because they kept on occupying the rotating chairmanship of the EU.

What Bush finds difficult to accept is that in the eyes of many around the world he has cut the United States down to EU size. He has diminished American power and American influence, and he is bequeathing to his successor an American economy in much worse shape than he found it nearly eight years ago.

The Europeans all understand that, which is why they are thrilling to the idea of President Obama (but they won't be too unhappy with President McCain). But they also thrill to the idea of a new Gorbachev in President Medvedev. The Europeans have understood the basic truth of the post-Bush era. The United States is no longer the only game in town.

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