) --

MF Global


sudden implosion gives us just a tiny whiff of the risk of a European meltdown, and it ought to be strong enough to make investors run for the hills.

MF Global saw its shares lose 66% in four days last week, leading to its bankruptcy filing Monday. The cause was a $6 billion bet on European debt that had barely lost money. Still, the markets, upon finding out about the bet, freaked out, creating an actual crisis at MF Global simply because they were worried about a potential one.

There is a lesson here. When addressing the threat from Europe, U.S. institutions like

Bank of America

(BAC) - Get Report



(C) - Get Report


Morgan Stanley

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JPMorgan Chase

(JPM) - Get Report

talk about their "exposure" as if it were a fingernail or--at worse--a finger--that could be amputated without material risk to the corpus that is the larger corporation.

But as the case of MF Global demonstrates, exposure takes many forms and has a stubborn way of working its way into the bloodstream when you're talking about, say, an entire continent--especially in our days of globalization. When JPMorgan discussed its exposure to Europe on its most recent analyst call, did it count MF Global? One suspects not, and yet it turns out to be MF Global's largest creditor, with $1.2 billion owed to it.

Following the market's realization of JPMorgan's $1.2 billion in exposure to MF Global, various analysts were quick to say that it isn't really $1.2 billion, because surely there are hedges in place. Fine. But we're talking about one company, and the fallout from that company's collapse has yet to be fully assessed. When it's all of Europe headed for a restructuring--minus, perhaps, Germany and a couple other countries--rest assured, the resulting mayhem will have grave consequences across the Atlantic and elsewhere--whether you're JPMorgan,

Wells Fargo

(WFC) - Get Report

, or the local credit union.


Written by Dan Freed in New York


Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.