Many European Banks are too overleveraged (35:1 is not unusual), but fortunatly for them most are universal banks. Fortis, Hypo Real Estate are somewhat different and with a great need for short-term credit to refinance they have been in big trouble. The TED spread (the difference between 3M LIBOR and 3M US TB) rose from 0,5% around 2006 to nothing short of 5% in the last days. I think this shows us how riskaverse every bank has become now - after forgetting completely about riskmanagement in the last 4 years.

Still the European economy is overall in far better shape than the American. Given stocks here lost even more than the DJ things look a little bit crazy here. Europeans have usually far higher savings than their US counterparts and have cut back spending not as heavily.