EU bail out - Could we cope?

Telegraph - ECB loses traction as the crisis hits Europe

"The global credit crisis has slammed into Europe with stunning violence over the last two days, triggering five major bank rescues and a near total shut-down of the region's credit markets...........

....."The ECB is no longer able to inject liquidity because the money is just coming back to them again [from banks unwilling to lend to us or each other]....

.....The combined crises at both Fortis and Dexia have sent tremors through Belgium, which is already traumatized by political civil war between the Flemings and Walloons. Fortis is Belgium's the biggest private employer. It is unclear whether the country has the resources to bail out two banks with liabilities that dwarf the economy if the crisis deepens, although a joint intervention by The Netherlands and Luxembourg to rescue Fortis has helped Belgium share the risk. Together the three states put €11.2bn to buy Fortis stock.
This tripartite model is unlikely to work so well in others parts of Europe, since Benelux already operates as a closely linked team. The EU lacks a single treasury to take charge in a fast-moving crisis, leaving a patchwork of regulators and conflicting agendas......"

[France is intervening to help out Dexia even though it is Belgian.]

FT - Reform and action are needed

"The key issue for Europe is not only that its largest banks are vulnerable because they have high leverage, but that they have grown too big to be saved by any single government.....

......One problem is that large European banks typically have subsidiaries – separate legal entities with separate balance sheets – in each country where they operate. At the same time, asset and liability management is centralised, as are cash and liquidity reserves, which at times of stress will be ordered back to the parent, with subsidiaries receiving in exchange paper which would be worthless in case of insolvency. When failure comes and governments step in, burden-sharing among national treasuries and issues of equal treatment of creditors and depositors in different countries are bound to be controversial, delaying decisions...."

Cometh the hour, cometh the man .

Times - Sarkozy calls for unified European response to the crisis
But on a case, by case basis - no Paulson like bail-out plan yet.