On Friday, Mario Draghi said “no”. The president of the European Central Bank declared that the eurozone crisis was a crisis in need of a political solution and the ECB would not bail out anybody. To underline the message, the ECB’s governing council had earlier in the day put up a ceiling of €20bn on its weekly bond purchases.

The consequence of these statements and decisions is that the eurozone crisis could well get worse in the short term. There is no political solution in sight. Angela Merkel, the German chancellor, rejects a eurozone bond. The European financial stability facility is too small to handle countries the size of Italy or Spain, let alone both. Even a fully operational, leveraged EFSF would not be in a position to give a “whatever it takes” bond purchasing guarantee.

The consensus view in Brussels and Berlin is that the crisis can be solved by technocratic governments imposing structural reform and austerity. That proposition is, in my view, insane. In any case, it will be tested shortly. Mario Monti, Italy’s new prime minister, is about to introduce a programme of reform and austerity. I wish him luck, but I doubt the bond markets will change their view on the sustainability of Italy’s debt in the absence of outside intervention. We have gone way beyond the point at which this crisis is solvable by standard instruments of economic policy. The survival of the euro will now depend on whether Ms Merkel or Mr Draghi, or both, will blink.