Governments are playing double or quits in their game with financial markets. The package they announced last weekend is dramatic. But the question is whether it is more than a temporary solution. The answer is: no. As initially designed, the eurozone has failed. It will succeed only if radically reformed.

What is the plan? First, European governments have committed €500bn (€440bn in loan guarantees to eurozone members in difficulties, and a €60bn increase in a balance of payments facility). Second, the International Monetary Fund will, it appears, put up an additional €250bn ($320bn, ￡215bn). Third, the European Central Bank has, to the chagrin of Axel Weber, president of the Bundesbank, decided to purchase the bonds of members under attack. Finally, the US Federal Reserve has reopened swap lines, to provide foreign banks with access to dollar funding. This is a panic-driven response to market panic. It reminds us of the autumn of 2008.

Will the plan work? On the assumption that it is ratified, the answer should be yes, as markets concluded (see chart). It greatly increases the cost of betting against the debt of weak governments. The public debt of the eurozone is slightly lower than that of the US, relative to gross domestic product. If the creditworthy governments decide to support the less creditworthy ones, they can do so, for now.