European banks collapsing despite US bailout

World stocks tumbled further today, as three European banks became the latest casualties of spreading credit woes, and news that Citigroup would purchase rival Wachovia Corp. overshadowed Washington's bailout plan.

The Belgian, Dutch and Luxembourg governments rescued financial firm Fortis over the weekend to prevent a domino-like spread of failure.

The U.K. government said lender Bradford & Bingley's branch network will be sold to Spanish bank Santander and the remainder of the group will be nationalized.

Moreover, Iceland's government bought a 75% stake to take control of Glitnir bank after the bank's funding position deteriorated in recent days, knocking the crown currency to record lows against the euro.

German lender Hypo Real Estate struck a last-minute deal with the government and a consortium of banks to resolve a refinancing squeeze.

In the United States, Citigroup Inc. is acquiring the banking operations of Wachovia Corp. in a deal supported by the U.S. government.

The Federal Deposit Insurance Corp. made the announcement this morning as Wachovia became the latest institution to succumb to anxiety over mounting losses tied to toxic assets.

The money market remained frozen with banks refusing to lend to one another for all but the shortest periods, prompting central banks in Europe and Asia to pump in more cash.

U.S. lawmakers are due to vote today on a $700 billion toxic debt fund after more than a week of negotiations. The $700 billion will be added to the US National Debt and will be paid for by American taxpayers, allowing many of the rich and wealthy working for America's investment banks to keep their jobs.

"One sees now, that not only American but also European banks are affected and that the crisis is after all global," said Carsten Klude, strategist at MM Warburg.

"A rescue plan worth 700 billion is simply not enough to overcome the crisis for the foreseeable future. If anything, all the real economy problems will escalate as a result in the foreseeable future."

The US bailout will help American investment banks (and their upper class employees) in this credit crisis, but the rest of the world's banks will be financially screwed.

If a global recession pulls down the American economy with it, whats the point of a bailout? American banks are only the tip of the iceberg.