POLICY in Europe is all about playing for time. The big-picture ideas for saving the single currency will take years, not months, to come to fruition — but the threat of collapse is immediate.

So the short-term mindset is all about survival: think the football team that parks the bus in order to defend a 0-0 scoreline or the batsmen whose sole aim is to occupy the crease when their team is facing an innings defeat on the last day of a Test match.

For a while last week, there was the real prospect that Europe's backs-to-the-wall effort had succeeded. Last month's summit had more substance than the previous content-free affairs, and the rally in European financial markets last week reflected the belief that enough had been done to keep things calm through August. That, though, was until the Spanish region of Valencia announced that it needed financial help from Madrid, providing the trigger for a big sell-off in the markets that continued on Monday.

The response from the Spanish government was to swear blind one minute that there was not the remotest possibility of a full-blown rescue involving the International Monetary Fund and to impose a ban on the short-selling of shares the next. The markets were suitably unimpressed by this display of ineptitude.

Meanwhile, Greece was once again coming under the spotlight as Athens awaited the arrival of officials from the Troika (the IMF, the European Central Bank and the European Union) on Tuesday. Greece is gripped by a 1930s-style depression and, perhaps unsurprisingly, is having trouble sticking to the austerity programme imposed as part of its bailout. It appears that the troika will threaten to cut off Greece's financial lifeline unless the coalition government agrees to an extra Eur2bn of cuts.

There are three conclusions to be drawn from these events. The first is that Spain is heading inexorably towards a bailout, probably quite soon. It was always a case of smoke and mirrors to imagine that the promised Eur100bn package of support for Spanish banks would be enough, and so it has proved.

This is a country with a collapsing economy, an imploding property market, banks nursing colossal losses and 10-year bond yields at 7.5 per cent. The question is not whether there will be a bailout, but how big it will be. At least Eur300bn in all probability.

The second conclusion is that the trapdoor is opening up under Greece. German patience with Athens has run out, and the IMF was forced to deny reports on Monday it was preparing to cut off financial support. The Greek government is now faced with the choice of agreeing to a new range of demand-reducing measures it knows will be both counterproductive and politically toxic in order to be able to pay its bills inside the eurozone, or to devalue and default outside monetary union. A voluntary Greek exit would be ideal for Angela Merkel.

What links Greece and Spain is that the failed approach that has brought the smaller of the two countries to the point of no return is now being tried with the bigger and more strategically important member of the club.— The Guardian, London