It's Europe, stupid!

It all seems so obvious now about why last week was so crummy. It wasn't our fault. It was their fault. Put simply and Equant ( ENT) and, to a lesser extent, Vodafone ( VOD)all stunk up the joint. Big-time.

We didn't think that much about here. But this was one of those companies that had huge backing and burned through a cool $130 million with virtually nothing to show from it. Putting aside the obvious mismanagement and the technical difficulties -- wasn't this just a Web retailer-catalogue company in disguise -- Boo was the Amazon ( AMZN) for Europe. Can you imagine if Amazon failed? Can you imagine what that would do to the investor psychology here?

If that weren't enough, Equant, the French network-communications company, reported truly disgusting earnings last week. Equant was a darling, a kind of Exodus ( EXDS) meets Cisco ( CSCO) meets WorldCom ( WCOM). But its quarter had severe margin pressure so people bolted and ratings downgrades ensued. This one broke the backs of a whole slew of technology holders in Europe.

The big steamer, however, has to be Vodafone ( VOD). This combination play was supposed to be their WorldCom, their great all-in-one communications play. But Vodafone isn't run by WorldCom President and CEO Bernie Ebbers. The tough choices aren't being made here fast enough. So no one wants in.

The result? A huge hangover from Europe every morning that casts an ugly shadow over our markets when we come in. The weak hands of Europe create downward pressure on us from the get-go.

Maybe the pessimism is beginning to be priced in over there. But they are going from extremely bullish on tech to bearish on tech overnight.

And we are feeling the consequences.
James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Cisco and WorldCom. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at