After faulting the U.S. for financial crisis, Europe looks at itself

PARIS — A week ago, European leaders said they knew who was responsible for the global credit crisis.

From risk-taking investment bankers to homebuyers who borrowed more than they could afford, Silvio Berlusconi, Italy's prime minister, blamed a "capitalism of adventurers" in the United States. The British prime minister, Gordon Brown, noted the crisis had "come from America."

But after problems at European banks helped spark a global stock-market rout and a 20 percent plunge on Wall Street last week, experts say lenders here all too willingly embraced many of the riskiest practices of their U.S. counterparts, bulking up on risky debt and relying on short-term loans, rather than deposits, to finance their operations.

Indeed, even while European leaders continued to point fingers at the United States as they completed their own rescue efforts Sunday, analysts predicted the eventual cost of the bailout on this side of the Atlantic could soon rival that of the $700 billion American plan.

And that pain won't be Europe's alone, as the turmoil continues to reverberate through the world's stock markets and make a global recession look more likely.

"The same mechanisms that led to the crisis in the United States were operating here," said Arnoud Boot, a professor of finance and banking at the University of Amsterdam. "It's totally misplaced for European leaders to put the blame on the Americans."

While the deposit guarantees and capital injections deployed in Britain and Ireland and across the Continent from France and Belgium all the way to Greece might allay the immediate panic, these steps will not necessarily free up credit for European businesses already hard hit by the global economic slowdown.

In fact, an ocean of short-term debt issued by European banks is set to come due over the next two quarters, with $375 billion maturing in the fourth quarter of 2008 and $339 billion more needing to be refinanced in early 2009.