There is an old saying: Nothing is official until it has been officially denied.

“Nobody has asked Spain, either officially or unofficially, to turn to Europe’s bailout mechanisms. We don’t need it,” Spanish Finance Minister Luis de Guindos said on Friday.

So Spain is probably about to need a bailout.

That’s a big problem, because Spain might be too big to bail out.

More worryingly, if Spain fails, then the investors are sure to turn on Italy next. Italy is the third-largest economy in Europe and is definitely too big to bail out—even for Germany.

Bold action is required if the United States of Europe is going to be saved.

Last week, Spanish borrowing rates surged above 6 percent, a level that triggered bailouts for other European countries. Rating agency Standard & Poor’s downgraded Spanish debt by two full notches. Unemployment has hit 24.4 percent. Youth unemployment is up to 50 percent. Rioting is becoming common. Property prices are dropping at a debilitating 7.2 percent annual rate (in contrast, in America, house prices are falling at a 3 percent rate). And Madrid is expected to announce that even its heavily massaged economic data indicate the country is back in recession again.

Spain is caught in a deadly debt spiral. Cutbacks are reducing the size of Spain’s gross domestic product faster than its debt. So even as Spain works to reduce debt loads, to investors it is becoming a greater credit risk. Spain is locked into the eurozone, so it cannot print money to pay its debts. But with the economy shrinking, it is becoming more difficult for it to pay its creditors. It is unclear if the big European banks that have lent to Spain would survive the loss of a Spanish default.

Without a bailout, a Spanish debt bomb may be about to explode the eurozone.

Germany’s ad hoc approach to the crisis isn’t working. It has tried to ring-fence the crisis with promises of individual bailouts on an “as needed” basis. Ireland failed. Germany bailed it out. The crisis spread. Germany wrung more concession from the eurozone. Portugal failed. Germany bailed it out. The crisis spread. Germany squeezed more concessions from Europe. Greece failed. Germany bailed it out. Germany forced through more “reforms.” And the crisis …?

With Spain now in trouble, it is clear the contagion cannot be ring-fenced—especially in light of perceived growing German bailout fatigue.

But without visible and strong German commitment to Europe, the economic meltdown cannot be stopped.

Consider the European Financial Stability Facility (the much-vaunted bailout fund). Nations have promised €780 billion to be used as needed. Of that amount, €54 billion was promised by Ireland, Portugal and Greece. But these nations are getting bailed out, so clearly they won’t be able to follow through with their commitment. Spain has promised to contribute €92.5 billion. But Spain can’t come up with enough money to help itself, let alone help anyone else. Italy’s share of bailout funds is supposed to be €139 billion, but it is in no better shape than Spain.

But here is where it gets scary for Europe. Austria, Cyprus, Malta, the Netherlands, Slovakia and Slovenia are not in positions to help with bailouts either—and may need bailouts themselves. Even France’s credit rating has been cut.

In other words, while the Europeans may talk a good talk, only Germany can walk the walk. Any European bailout is in effect a unilateral German operation.

So Germany had better be prepared to walk. But toward which destination?

Does Germany continue to try to “ring-fence” individual economies as they collapse—meanwhile taking full advantage of the situation to extort political and economic reforms in exchange for bailout money?

Or does Germany step the bailouts up to the next level?

The number-crunchers in Berlin are doing the math. A complete eurozone meltdown would destroy Germany’s economy just as surely as it would Greece’s. Who would buy German exports? And since Germany is already virtually bankrolling all the bailouts to keep Europe from collapsing, why not run the bailout for all it is worth?

France’s possible next president Francois Hollande is practically begging Germany to agree to a pan-European debt union. Hollande wants a federalized debt union in which eurobonds would be backed by all nations. It would be a huge step toward a true federalized and centralized European government.

And now, more than ever, Germany might be “convinced” to ride to the rescue.

It would be a dramatic move that could alienate German voters—but the potential payoff would be exponentially more massive—if it solved the financial crisis. And who knows what else Germany could get in return for agreeing to become the paymaster of Europe.

Spain appears to be rapidly heading toward a crisis. Can Germany bankroll Spain on its own? Or will this be Germany’s opportunity for the biggest coup of all time? Will Germany agree to a real United States of Europe? If it does, you can be sure it will ensconce itself as the paymaster—and de facto dictator—of Europe. And it will do so without firing a shot.