European governments announced a flurry of bank bailouts from Germany to Iceland

European governments announced a flurry of bank bailouts from Germany to Iceland, but the rescue deals only heightened fears that the contagion from the U.S. credit crisis has much further to spread before the financial system recovers.European shares fell heavily Monday and money markets remained frozen with banks refusing to lend to each other for all but the shortest periods amid concern that a planned U.S. government $700 billion bailout package would not be enough to stem the crisis.
A few hours later, the U.S. House defeated the rescue package by a vote of 228-205, but lawmakers were expected to reconvene Thursday in hopes of a quick vote on a reworked version."In the near term, it will be the weak ones that will be picked off," Global Insight chief European economist Howard Archer said before the U.S. congressional vote of the expectation that more banks would collapse or need rescue.
"But, obviously, the more the turmoil and dislocation continues, the further this could spread," he added. "We live in vicious times."