Mark Steel: View From The Terraces (or while watching in a Portuguese bar)

Those who thought we'd win the World Cup must feel like someone who's just left a weird religious cult. Documentaries will be made in which they explain "I know it sounds mad but I honestly believed it - I was brainwashed. People pleaded with me to see sense - friends, my family, James Lawton - but I was in a sort of trance."

Some have even compounded their delusion, blaming the English demise on Portuguese cheating. We knew they were wily and crafty but winking when a chap's sent off. OK, if we're being fair, our boy stamped on an opponents' goolies which is not strictly speaking allowed since the Fifa directive clamping down on castration - but winking. It's lethal - a badly timed wink could end a player's career. Wayne Rooney has said Cristiano Ronaldo told him before the game, "I am going to get you sent off." So it's agreed it was all Ronaldo's fault. He must have sneakily hypnotised Rooney, saying: "After one hour of the game you will believe Ricardo Carvalho's nuts are the ball."

This was not the view among the majority on the streets in Stockwell in south London, where the Portuguese community mobbed the bars, in a vibrant and anxious atmosphere. They were joined by a few English, including a journalist writing for another newspaper. But she let herself down slightly by wandering amid the purple Portugal shirts, the Portugal banners and Portugal scarves draped round the Portuguese bar where the Portuguese chanted "Portugal" at the Portuguese television and asked a Portuguese man, "Now, this meal you're eating here, is that a traditional Spanish dish?"

For the first half the Portuguese were quiet and doubtful, echoing their team's performance in which they hesitantly punched above their weight, while England's team and supporters hesitantly punched below their weight. So the main noise came when the ball approached the Portuguese box and a series of shrieks ran through the street, as if the whole of Stockwell was creaking towards a long steep descent on a roller-coaster.

At half-time they broke into song and dance, as if this was the only part of the game when they weren't terrified about conceding a goal. Someone should have chanted, "Sing when it's half-time, you only sing when it's half-time."

One of the most enthusiastic singers was Lel, who worked in a coffee shop. There wasn't a cell of her body not Portuguesed in some way by clothing or paint, and she kept yelling "Portugal" at random intervals, maybe in case anyone was stupid enough to think, "She probably supports Spain". She said: "I didn't mind who won this game, as I'm Portuguese but have lived here 14 years, but the newspapers have been so horrible about the Portuguese these last days now I really want to beat England."

The second half was one of those periods that makes the World Cup so compelling, not necessarily skilful, but the drama increasingly intense, every missed pass or cross charged with meaning, potentially leading to an iconic moment that everyone watching will remember for ever. Then came one of those moments, Rooney fuming as he departed. As he left the field, a market trader strode into the bar with a huge plastic sack and yelled "Portugal flip-flops, three pound a pair."

The Englishman in me was part intrigued and part terrified at how Sven would deal with this. Perhaps he'd send on Michael Owen, still strapped to his stretcher, laid out flat in the centre circle.

The last 10 minutes were pulsating, regardless of the quality of play. The spectators, as they do in these moments, lost their identity as a crowd and became a mass of individuals, with collective chanting replaced by lone pleas and exasperated convulsions. When Steven Gerrard's cross almost found Peter Crouch, one man of about 60 was consumed with such anguish he did two complete backward spins on his haunches, so that if he had finished by throwing up an arm and yelping like a dog we'd have thought he was Michael Jackson.

Then penalties. "Oh God, what nutty scheme will Sven have concocted here?" I thought. I wondered whether he might put Paul Robinson first, followed by Ashley Cole who would be told to run up, but as he's about to take the penalty, dive on the floor and appeal for a penalty.

"Gerrard never misses. Never," I announced. Which possibly makes it my fault. And you know the rest. Except that, somehow, seeing John Terry cry to Portuguese commentary was even sadder than when accompanied by the familiar despair of English commentators on these occasions.

As the Portuguese drummed and danced and waved their flip-flops, a steady trickle of England fans arrived, complete with England shirts and flags, not to seek revenge but to participate. "We both cried at the end," said John and Jordan, two brothers who were 10 and 12, "So our mum said, 'Come on, we're going down Stockwell'." And along with my own lad they conga-ed in their England gear with the Portuguese.

Spotting one crestfallen couple in white shirts, I approached them in a pathetic effort to offer consolation, and they said: "We are really sad. Because we are German and so much wanted to beat you in the final."

Wandering away, it didn't feel too bad, and then we passed a pub, outside which 30 England fans were stood with faces that a bad actor would pull if asked to do "rage". One of them was marching up and down, backwards and forwards along the same 10 yards while growling, like a bear in one of these documentaries about barbaric zoos in Romania. "He's angry, we're all angry," explained his mate, Derek. "They're tooting their horns in our faces. I mean They're in on our gaff. That ain't the end of it mate, cos let's face it, at the end of the day England fans don't run away from no one."

Between these outbursts, Derek cheekily and kindly ruffled the hair of passing boys, saying: "Don't worry, mate." He was probably about 30, so for all his life, from the Falklands War to boasts about the SAS and portrayals of Phil Scolari as a chicken, he's been taught by school, politicians and the press that he's part of a naturally dominant breed, that runs away from no one. So when the reality unfolded that we can't beat Portugal he responded with the rage of betrayal.

Ironically, maybe this is the psyche, driven by false expectations, that leads to all the insecurities and demons that mean we always bottle a penalty shoot-out. Or then again - maybe we're just shit at taking penalties.