Three steps are needed to rescue the euro, and possibly the European Union as a whole, from quickly collapsing in a wave of disorderly sovereign defaults and bank failures.

First, the size of the liquidity facilities providing temporary financial support to vulnerable nations must be increased to €2000 billion ($2644 billion), of which at least half should be funded immediately. The current liquidity facilities stand at €860 billion. But because of the desire to maintain a triple-A credit rating for the largest component, the €440 billion European Financial Stability Facility (EFSF), the amount actually available to lend is only between €560 billion and €610 billion.

To this one can add the €67 billion worth of outright purchases (thus far) by the European Central Bank of euro- zone periphery sovereign debt. But even with that the total available is only between €627 billion and €677 billion.

That would do nicely to tide over Greece, Ireland and Portugal till mid-2013. Then the existing facilities expire and will be replaced by a permanent mechanism for the resolution of crises, designed to permit the (more) orderly restructuring of both old and new sovereign debt, through maturity extensions and haircuts for the creditors. However, it is probably not enough to fully fund the potential requirements of a troubled Spanish economy. It also falls well short of what would be needed to fund the countries like Italy, Belgium and France, should they be frozen out of the markets by a self-reinforcing and self-fulfilling wave of rising risk aversion and panic—and it certainly is not enough to deter such attacks.

Members of the euro, and even the EU as a whole, cannot in practice come up with an immediate €1000 billion. The International Monetary Fund is also not allowed to take part in any pre-funding exercise. That leaves just two sources of possible funds. The first is non-EU sovereign wealth funds. The second is the ECB. And given the first option is likely to be politically unattractive, that only leaves the ECB.