[jyl]

The crisis has moved well beyond US subprime mortgages.

I am not that well read up on the details, but I think European banks are in danger for reasons that have to do as much with their own lending as with lending by US banks. The most obvious example is the UK banks being hurt by UK residential mortgages, from Northern Rock to Bradford & Bingley. Germany's Hypo is in the commercial property lending business. Fortis I am not clear about, but they seem to have over-extended themselves buying ABN-Amro. Dexia appears to be suffering from its connection to Depfa and thence to Hypo. Admittedly the Swiss banks do seem to be hurt by their US subprime lending, but they made the loans. My impression is that the large European banks were even more leveraged than the US banks. And then there are the markets, like Russia and Brazil, being hurt because of commodity price falls.

If you use the analogy of a forest fire, I think the first spark was in the US (plus the UK, after all Northern Rock went under back in 2007) but has found fuel elsewhere as well. And the European firefighters were slower to act, are less coordinated, and have less firefighting equipment than the US ones.

Hopefully someone knowledgeable like 911teo will chime in.