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PARIS - Six months ago, the growing problems of America's financial sector were greeted in Western Europe by indifference that bordered on schadenfreude.
Most Europeans, it would be fair to say, believed they would be unaffected by America's mess. Indeed, many believed that if the "Anglo-Saxon" model of
financial capitalism - of ultra-light regulations, golden parachutes, mega-bonuses and financial derivatives of mind-boggling complexity - had come off the rails, it only had itself to blame.
Across continental Europe, governments and citizens prided themselves that natural prudence had averted a similar crisis. In France and Germany, for instance, households save between 10 and 12 per cent of their income on average, compared with 1 or 2 per cent in the United States.
Unlike the US and Britain, credit cards on the continent are relatively rare, as most people prefer debit cards to keep spending within their income.
As for housing - the trigger for America's problems - mortgages in continental Europe are awarded conservatively.
Home buyers typically have to stump up a deposit of 20 or 30 per cent and pay transaction taxes of between 5 and 10 per cent, a hefty imposition that also dampens speculators.
Banks will closely scrutinise a borrower's bona fides and employment record and in any case tend to limit their mortgages to a maximum repayment of a third of the individual's monthly income. The loan will be of relatively short duration, of say 15 to 18 years.
But in the past week, Europe's "I told you so" reflex has been replaced by shock as Europeans realise the extent of their exposure to America's storm.
In the past few days, the governments of Belgium, France, Germany, the Netherlands and Luxembourg have launched bailouts to save three banks. Britain has nationalised the former building society Bradford & Bingley.
Ireland, threatened by a banking slump, has declared it would guarantee all bank deposits. The European Central Bank (ECB), so proud of its austere stewardship of the euro, has pumped billions of euros into the system.
Smugness has disappeared, replaced by fears of job losses, a sudden focus on belt-tightening and panicky questions as to whether savings could go up in flames.
Ireland has already officially entered recession and the European Union's executive commission has said Britain, Germany and Spain will follow suit. In France, more than 41,000 people lost their jobs in August, the biggest monthly increase since 1993, bringing the national tally to 1.95 million.
Stunned at how extensively involved some of their banks were in the US disaster, some opinion-makers are now pointing the finger at globalisation and managerial hubris.
In hindsight, they say, a clutch of grey, boring European banks wandered into disaster, like a civil servant in mid-life crisis who is lured into a casino and throws away his family's savings at the roulette table.
This surprise is acute when it comes to the three-state bailout, worth ¬6.4 billion ($13.5 billion), for an anonymous French-Belgian banking group called Dexia.
Dexia (corporate motto: "Short term has no future") specialises in bog-standard loans to local authorities in Europe. It was driven to the brink by indirectly insuring toxic US mortgages.
European Union finance ministers are due to meet in Luxembourg next week, and are facing pressure to tighten up supervision and boost cross-border co-operation.
"We need a pan-European regulator," said Gustav Horn of Germany's Macroeconomic Policy Institute. "Otherwise, banks will always try to avoid regulation by moving from one country to another. We have seen that in the past and that was wrong. We also need a global sort of regulation."
Another big issue will be about tackling excessive remuneration for executives, through such methods as taxing severance payments and requiring companies to disclose to shareholders what their directors are being paid.
Back in 2004, the European Commission floated ideas on such lines, but it was slapped down by Britain, defending the then-flourishing City of London. These proposals may now gain traction as resentment at the masters of global finance deepens.