Until very recently, many in Europe thought the continent could avoid the worst of the financial crisis sweeping the United States.
As the storm swept in from across the Atlantic, European policymakers appeared confident. Europe could come through relatively unscathed. No need for a U.S.-style bailout, sniffed an EU commissioner, because Europe's situation is "less acute."
But big lenders in Belgium, Germany, and elsewhere have since run into trouble, and governments have come to their rescue. A wave of bank rescues in the last few days has exposed Europe's vulnerability.
Now, as the European Union looks to strengthen its financial system, the idea of a U.S.-style rescue is no longer unthinkable.
Banks are under strain for a number of reasons -- the credit crunch; their exposure to assets related to the U.S. housing market; the bursting of property bubbles in countries like Britain.
Others point the finger, too, at accounting rules that require banks to state the value of their assets in line with market prices. They say this has aggravated the crisis by forcing banks into huge write-downs.
Central banks have repeatedly pumped cash into the money markets in a bid to keep credit flowing.
On October 1, European Commission President Jose Manuel Barroso called for another kind of injection.
"It's not just a problem of injecting [monetary] liquidity. We also need to inject credibility in the European response," Barroso said. "That is why we are asking and urging member states for a closer cooperation."
But what form could that take?
One idea is for a U.S. style rescue. That plan -- initially put forward by Treasury Secretary Henry Paulson and still going through Congress -- is for the U.S. government to buy up to $700 billion of bad debts from financial firms.
"Frankly there can't be Paulson plan at the level of the European Union for the simple reason that the EU doesn't have a fiscal capacity, it doesn't collect taxes, it cannot borrow from international markets," says Nicolas Veron, a research fellow at the Bruegel Center in Brussels. "We are condemned in Europe to have coordinated action by individual member states, and we can only hope they will act in a coordinated way, as that's the only way to be efficient in an integrated market."
One positive example of that coordinated action, Veron says, is last week's rescue of financial firm Fortis, involving the national governments of Belgium, Netherlands, and Luxembourg
Still, such a "piecemeal" approach might not always work. Veron notes similar cooperation might be harder with countries that don't share such close ties.
And already other unilateral action has caused discord.
There were protests when Ireland announced this week it would guarantee all deposits at six main Irish banks, a move Britain said was unfair.
Such divergent approaches show governments have been unprepared, says Stefano Micossi. director of Assonime, a Rome business association and think-tank.
"The first thing you need is a kind of European appendix to the Paulson plan," Micossi says. "We need a contingency fund to be able to rescue banks as needed. Because to do it with national means might not be feasible if one of the major banks comes under attack."
The idea was put forward in a recent article Micossi wrote with Daniel Gros of the Center for European Policy Studies. Micossi says such a fund could be set up quickly.
"We could use an existing European financial agency such as the European Investment Bank," he says. "Of course we would need to change the statutes, we would need to put up capital to make it possible for this agency to issue bonds, and it's fairly easy then. The bank should be authorized to take equity stakes in banks and, of course, we need a mandate what to do in what circumstances. But this can be done fairly quickly."
This week there have been calls for some kind of Europe-wide plan. Among them, the chief executive of Germany's Deutsche Bank, Josef Ackermann, and the secretary-general of the Organization for Economic Cooperation and Development, Angel Gurria, who said Europe "might have to start thinking of a systemic plan" if things don't improve in the United States.
But there are divisions.
Overhaul Of Banking Rules
Reuters reported that France was ready to propose a 300-billion-euro plan. Germany immediately said it would not support the idea. And French Finance Minister Christine Lagarde later denied such a plan even existed.
More clarity may come on October 4, if a tentatively planned meeting of the leaders of Britain, France, and other big EU countries goes ahead in Paris.
In the meantime, the European Commission on October 1 proposed an overhaul of some banking rules to tighten supervision and force banks to set aside more money for when times get rough.
The commission also said it would also change the "fair-value" accounting rules that have been blamed for making the crisis worse.
But it will be two years at least before these come into effect, meaning these measures are aimed at the future -- not at solving the current crisis.