The markets are wilting under a wall of worry that’s slowly turning into panic.Something should have been done about the euro crisis months ago. Now, slowly but surely, people are beginning to think nothing is going to rescue the Eurozone from a slow motion disaster. All member states bar Germany may be forced to the wall by the inaction of the EU to bail out its economy and currency.For weeks now, stock markets of the world from Tokyo to Frankfurt to New York have been fluctuating in a manic depressed range of approximately five percent as expectations of a concerted effort to solve this giant crisis ebb and flow.The mindset is; surely Europe won’t let itself fall to pieces for want of a big bail out check to its weaker members.The whole point of society in social Europe is for the rich and successful to bail out the poor and unsuccessful. It’s the very core of the so-called social contract. Yet it appears there is no patience for this between states.Feckless southern states are not going to be bailed by a hard working northern country which has diligently built its fortune. As per the Greek fable, the ant is not going to feed the happy-go-lucky grasshopper - even though at home there would be no hesitation.The market is struggling to comprehend a rescue is not in place. Yet as the clock ticks on, so a slow realisation is dawning - that Europe could well implode in a firestorm of sovereign debt contagion. The US is becoming a little shrill about the need to do something. An avalanche begun in Europe could well sweep away the “blank cheque” strategy of the US Fed and Treasury once a sweeping credit freeze on soverign borrowing comes into play.In 2008 not long ago - the US experienced the near end of its financial biosphere yet its TARP and TALF programmes managed to turn back the tide of a crash that would have rivalled 1929. Yet Europe, or rather Germany, now risks a reboot of a credit freeze that, this time, might be too large to thaw.It’s little wonder equity markets are in trauma.Commodities markets are also in shock. Scared by the volatility, they have moved to calm the waters by making it more expensive to buy or sell contracts. Normally a commodity trader need only put up a small fraction of the value of the commodity they are trading, meaning they can load up on plenty. When margins increase they are forced to buy and sell less, therefore the wild market action is deadened. However, when margins are boosted, traders are forced to hold fewer commodities and, if they were holding a lot, are forced to sell, creating a short term price collapse.So it is when money runs for cover; markets fall.This is why in a nutshell markets are falling and safe haven instruments like short term treasuries and the yen are jumping; because the markets are scared and have run for cover.With no respite on the cards from a euro sovereign debt disaster and its ramifications, many investors and traders simply do not want to play. Money has drained from the markets and without the oceans of cash normally providing liquidity to trade in, selling simple crunches the price.What’s worse, as the market falls and liquidity dries up, so the fear of collapse of Greece, Portugal, Italy and Spain feels more likely. The unthinkable: that there is no European bail-out rescue to be had, becomes increasingly possible. “Possible” then increasingly becomes “likely.” Then, before the politicians have reacted, likely becomes inevitable.This is the slope the markets find themselves on right now. A vicious circle bred by political inertia is slowly edging Europe towards the economic abyss.The cynical believe this is part of a plan to federalise Europe from the shattered economic pieces of a broad European sovereign default. If this is true then the price for this political union will be truly giant. More likely Europe is simple proving what has been long established - politicians simply do not do “economics” well. In this case, that truth will carry an extremely high price.Clem Chambers is a familiar face and frequent co-presenter on CNBC and CNBC Europe. He is renowned for calling the markets and predicted the end of the bull market back in January 2007 and the following crash. He has written investment columns for Wired Magazine, The Daily Mail, The Daily Telegraph and The Daily Express and currently writes for The Scotsman and Forbes.