Instead, they pinned their hopes on a vague plan for a wider international summit next month to include the Group of Eight countries plus China, India, Brazil, South Africa and Mexico. French President Nicolas Sarkozy suggested the global summit would seek "to rebuild the world's financial system ... and create a new financial world, just as Bretton Woods did 60 years ago."

There is, however, little sign that the United States is ready for such a sweeping new project. The Bush administration has just over 100 days left in office, and the new president has yet to be chosen. The United States is unlikely to be ready to take part in any huge economic policy commitments before the next president is sworn in.

The European leaders were themselves unable to agree on any serious measures. France's proposal for a common European $500 billion bailout fund was rejected by Germany, which feared that as the largest European economy, it would have to pay for the lion's share of it. As if to highlight their collective impotence, Germany's Hypo Real Estate group teetered on the brink of collapse as the four leaders gave a joint news conference full of airy pledges of coordination and collective resolve but no serious policy agreement.

Those four countries have a combined GDP close to $10 trillion, compared with $13.5 trillion for the United States, and dominate the 27-nation European Union. But it is not easy to say what Europe's vaunted union really means as the crisis grips. Economic nationalism and self-interest appear to trump any common European policy.

Ireland and Greece appalled their EU partners last week by giving blanket guarantees to all deposits in their national banks to fend off threats of runs on their banks. But the rush of depositors in other countries to move funds into Dublin and Athens to take advantage of the extraordinary guarantees threatened runs on other banks in Britain, Italy, Holland and Belgium.

The crisis at Hypo, Germany's second-largest commercial property lender, came as a government-brokered $50 billion rescue plan collapsed when a consortium of banks that were to have provided about a third of the funds backed out. The bulk of the money would have come from the German taxpayer. The banks claimed that Hypo's situation had worsened dramatically over the weekend as European money markets froze, making short-term loans prohibitively expensive.

"We are fighting for the future existence of the company," said Hypo spokesman Hans Obermeier.

The Hypo crisis came as France formally went into recession, with negative growth in two successive quarters, and as governments across Europe scrambled to prevent panic among investors and depositors.

"We will not allow the Hypo problem to infect the broader banking system," German Chancellor Angela Merkel declared Sunday.

Britain's top economy minister, Alistair Darling, said his government was prepared to help individual banks at risk from the credit crunch and take "pretty big steps that we wouldn't take in ordinary times" to ensure that Britain gets through the current crisis.

Banks in Britain, Iceland, Holland, Belgium, Greece, Germany and Ireland all teetered last week or had to be bailed out by government action as the U.S. Congress tried and for most of the week failed to pass Treasury Secretary Hank Paulson's $700 billion rescue package. The breakdown of the Hypo Real Estate rescue is likely to send fresh alarm through the markets that the various emergency measures in Europe and the approval of the $700 billion American rescue have neither eased the crisis nor stopped it from deepening.

Indeed, some aspects of the crisis look set to worsen. In Iceland, for example, a tiny country with a GDP of less than $20 billion a year, after a decade of go-go expansion its overstretched banks now have combined foreign liabilities of $140 billion. Any Icelandic government guarantee will struggle for credibility in such circumstances, unless other and bigger EU governments offer support.

One key decision is, at least in theory, beyond the power of Europe's governments. The European Central Bank and the Bank of England are designed to be wholly independent of short-term political influence by governments and have the sole power to set interest rates -- a power that France's Sarkozy has long criticized. But it will be up to the central banks to decide whether they start cutting interest rates from Britain's 5 percent and from the eurozone's 4.25 percent.

These are more than double the Fed's base rate in the United States, and European businesses and governments are hoping almost desperately for some relief, despite the deep-seated fears of inflation. The problem, of course, is that slashing interest rates in the United States has not stopped the financial crisis, although it may have helped fend off or delay the recession.

Beyond that, the lack of serious result from the weekend's European summit and the likely absence of any decisive U.S. involvement in an international solution until a new president is sworn in raise the prospect of a new problem: that the financial crisis is likely to continue for some weeks with little effective government involvement. The markets may be on their own.

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