Currently stable. The European Central Bank just released 70 billion € for banks as loans in case, trouble tries to get over (out of the 448 billion € reserves). Also, the drop of the inflation rate in Europe means the ECB has some freedom for lowering the interest rates, if needed, as they don't need to fight a runaway inflation currently.
I don't know the details of other countries in Europe, but the German situation is pretty good:
The German economy prepares with a small decrease, after it had a pretty stable growth in the last years. Tax income in German in 9 billion € higher as estimated this year, meaning the government will have more freedom if trouble arises. Only very few banks had been affected by the US crisis, as most banks here prefer a more solid (and stingy) approach to issue loans. The share courses did drop the last days, but that mostly in anticipation of worse trade conditions inside the USA.
As summary for your questions:
Almost all governments have a deficit here, but it gets reduced.
Prices are going still up, but not as fast in the last years.
And too many people are storing their money in the bank, instead of investing it, which is a typical European problem. We don't consume as much as we could, which is also not good for the economy, but currently a stabilizing effect.
As the assurance companies in the USA already get bad ratings, this means chances for European companies in the business.
It is all not at all bad, but of course, a USA which could buy European products would be preferred. Nobody here really hopes for a economic downfall of the USA.
