If necessary, the EU has the ability to carry out collective actions to save its financial markets. However, the recent measures will not fully shield EU countries from the financial crisis roiling the United States, Liu said.

"Inflation in Europe will be worse, and the euro might depreciate," Liu said. Many European countries have enacted economic reforms in recent years to become more competitive, contributing to economic recovery. "The expected economic growth rate of the European economy this year was 2 to 3 percent," Liu said. "Now it will be very hard to realize that target."

Since trade between Europe and the United States accounts for about 40 percent of trade volume worldwide, the EU's foreign trade will be greatly influenced by the U.S. financial crisis. Europe is also the biggest investor in the United States, so it will suffer in that respect as well.

European banks with business connections with their American counterparts have been among the first victims as the financial crisis spreads. "Some European banks have been dragged down," Liu said. With less credit available to homebuyers, the European real estate market will be hit next.

The biggest danger to the average European, however, is unemployment, which has already been a problem in many countries. Although the unemployment rate in France stood at 7.2 percent in June, a 25-year low, the number of French workers seeking jobs increased by 40,000 in August, the biggest one-month jump in 15 years. The worsening unemployment situation might trigger social instability in these countries, Liu said.

Zhou Shijian, a senior researcher at Tsinghua University's Center for China-

U.S. Relations Studies, told Beijing Review that the U.S. financial crisis is not the only reason Europe is in trouble. "Some countries in Europe also have subprime mortgage problems," Zhou said.

If EU members act only for themselves, it will do little to help the current situation and could hinder the larger EU integration process, Zhou said. Before the EU finance ministers issued their joint statement, some EU members had to take emergency action. The European Central Bank was providing one-day loans of 35 billion euros ($50 billion) to infuse capital into financial markets. On October 5, the Belgian Government announced that BNP Paribas, France's largest bank, would take over the Fortis group's businesses in Belgium and Luxembourg for 14.5 billion euros ($19.8 billion). Even Germany, which criticized Britain and the United States for their financial bailouts, announced on October 5 a 35-billion-euro ($50 billion) plan to save German mortgage lender Hypo Real Estate.

"It is still too early for us to judge how efficient EU members' coordinating efforts are," Zhou said. "But it is sure that the EU is not out of danger yet."

Further danger

Historically, when the United States faces a financial crisis, it tries to unload its burden on other countries, especially those sharing closer relationship with the United States, Zhou said. European countries thus could easily become U.S. targets.

Zhou said there are several approaches the United States might take. The first is to depreciate the value of the U.S. dollar. "Only one third of the total amount of U.S. dollars is flowing inside the United States, and Europe is the biggest dollar-holder in the world," Zhou said. "Dollar depreciation will first hurt the interests of EU countries."

Another option is to issue state treasury bonds. Zhou pointed out that although these bonds have more guarantees, they also have cash-in problems. In the meantime, some U.S. financial institutions and companies will also issue bonds to raise enough money to survive the crisis. Zhou noted that both measures could easily cause more damage to EU countries.

Zhou said the biggest danger is not the current financial crisis, but the economic depression that could result. "The contractive policy of financial institutions will cut down the capital chain of the industrial sector and then trigger economic depression," he said. "Europe and the United States will be the first to suffer."