Panicky Germans look at the US and the UK and turn fearfully to their leaders with a message that says “avoid following these Anglo-Saxon risk-takers at all costs”. Careful planning and diligent working practices are the route to long-term sustainable prosperity, not betting on stock markets or speculating on property for a big payday.

It’s a stereotype, but one that accurately encapsulates the suburban over-50s worker who has corralled wealth and assets beyond the dreams of their mothers and fathers. The problem for the Germans is that much of their wealth is intangible and can suddenly be worth a fraction of its former value. Huge investments in Italy and Spain are now teetering on the brink of worthlessness. Spanish and Italian bond yields, which measure the risk attached to a country’s debt, jumped again on Monday.

German living standards are not based on stock markets or property values, but on bonds issued by countries that in many cases followed the Anglo-Saxon model and based their wealth on stock markets or property – or in the case of Greece, funding from Brussels. Bonds are loans with an agreed lifespan that are bought on open markets.

German banks lent money to the Greeks by buying the country’s bonds. While a private sector refusal to buy Greek bonds is manageable, an effective private sector ban on buying Spanish and Italian bonds to match the ban on Ireland and Portugal is a huge problem.

Germans and their banks have bought these bonds by the bucketful. Similarly, they were one of the biggest buyers of sub-prime mortgage debt in the US. If the value of bonds goes down because no one wants to buy, the bedrock of German wealth, which is wrapped up in sovereign and corporate bonds, also slides downwards.

Where the Germans are right to worry is the tendency for Anglo-Saxon markets to panic and overreact. So it is probably true that our banking sector was in better shape than was reflected in financial sector share prices after the Lehman’s shock. Likewise, the collapse in house prices across the US is worse than the standard demand-and-supply pressures would normally dictate.

Yet this overreaction should be a warning. On Thursday the EU, led by the German government, has the opportunity to recognise the loss in value and nationalise those losses. If it refuses to recognise the losses, it risks becoming a laughing stock. If it recognises the losses but asks the private sector to play its part, it risks panic and an even bigger loss of value than has already been priced into markets.

Only by stepping in and issuing cheques to the value of the outstanding debts of the worst affected nations, estimated at €2tn, can the day be saved.