It's time ECB stepped in to save the euro

Panic is beginning to overwhelm the eurozone. Italy and Spain are caught in the maelstrom. Belgium is slipping into the danger zone. As France is dragged down, the widening gap between its bond yields and Germany's is severely testing the political partnership that has driven six decades of European integration.

Even strong swimmers such as Finland and the Netherlands are straining against the undertow. Banks are struggling to stay afloat - their capital providing little buoyancy as funds drain away - while businesses that rely on credit are in trouble, too. All signs point to a eurozone recession.

Left unchecked, this panic over sovereign solvency will prove self-fulfilling: just as a healthy bank can fail if it suffers a run, even the most creditworthy government is at risk if the market refuses to refinance its debt. One can scarcely bear imagining the consequences: cascading bank and sovereign defaults, a devastating depression, collapse of the euro (and perhaps even that of the European Union), global contagion and potentially tragic political turmoil. So why aren't policymakers doing whatever it takes to avoid a catastrophe?