Europe: Screw the Paulson Plan, we’re nationalizing our banks
More specifically, England has decided to spend 35 to 50 billion to buy preferred shares in the largest most troubled banks. Assuming they're not non-voting that amounts to nationalization. It will increase the banks capital base substantially, thus hopefully directly ensure that they aren't insolvent and can lend again. I am also hearing that Germany has a similar plan in the works.
Notice that they are not buying up the trash on the banks books (though I'm also hearing rumors that the banks really really wanted them to.)
I'm not convinced this will fix the entire problem, but if you think the problem with banks is that they're insolvent and that other banks are scared to lend to them, then this at least makes sense. It also means that banks don't need to keep money aside to buy up other banks in case they fail, since the government is effectively saying "we won't let banks fail." On the other hand, it still doesn't deal with the fact that banks don't want to lend for less than inflation+reasonable profit.
However regulators and the social contract in both Germany and Britain are a lot stronger than in the US, as is the willingness to, oh, lean on people. As a result the banks, now more or less owned by the government, may find it in their hearts to start lending again, as their new lords and masters desire.