Wall Street Journal reports that German chancellor Angela Merkel and French president Nicolas Sarkozy are to speak today “with the ‘current situation in the euro zone’ among the issues to be discussed.”  They have much to talk about.

 Today’s U.S. monthly jobs numbers released at 8:30 showing an uptick of 117,000 jobs and a 0.1% drop in the unemployment rate gave markets an early boost.  Then they looked East at about 9:50 and the Dow slid 161 points into negative territory.  As of this very second, the Dow is up 114 points – though by the time this sentence is finished it’s anyone’s guess where it’ll be.

Backing up from the market chaos for a breathless moment, it’s painfully clear that neither the United States nor Europe have convinced markets that the future looks bright.  We don’t yet know what Sarkozy and Merkel will discuss, but clearly someone told Silvio Berlusconni he needed to say something bold, and the Italian government’s declaration that it will speed fiscal reforms gave panicked markets some reprieve.  But after multiple failed attempts to convince markets that the EU has the situation in hand – the latest coming over two weeks ago – here’s what the French (as G20 leaders) and Germans (as the linchpin and funding source for any credible package) need to lay out.

• Increase the size of the EFSF.  No one believes it has nearly the required funds to shore up Europe’s teetering economies.  The Germans have said an increase is “ill-timed.”   Well, so is the collapse of the European economy, so maybe it’s not as bad a time as it seems.

• Stand behind all of the PIIGS, not just Greece.  Euro zone leaders and the ECB have refused to say they’ll back more than Greece in a restructuring and bailout.  So markets went straight for Italy and Spain.  The ECB’s purchase of Irish and Portuguese bonds yesterday threw everyone a curveball and didn’t work.  Today’s admonishment by Economic and Monetary Affairs Commissioner Oli Rehn to “keep calm and look at the fundamentals” of Italy and Spain didn’t do much either, even though he’s right.  It’s time for a definitive statement that Europe clearly sees the scope of its troubles and has a unified plan address them.

• Plan for growth.  Behind all of the immediate efforts to keep Europe (and the United States) solvent is the knowledge that at the end of the day the issues facing most of these economies is lack of growth.  This will require funding from the EU in some cases (i.e., technical and other assistance for Greece), and austerity matched with smart tax and regulatory policy in others (Italy, Spain, the U.S.).  And as much as Germany doesn’t want to admit it, it also means addressing weak bank balance sheets.

• We’re getting the G7 back together. If anything has put the lie to the claim that the G7 no longer matters, it’s the current transatlantic economic situation. This group needs to talk, and fast. The G20 can’t do anything about what’s happening, but coordinated G7 action can.

Most of these measures require more funding, and therein lies the political challenge for demonstrating leadership.  But without a bold plan with clear vision, pushing for more public and/or private support for restructuring is pointless.  Voters will see no end to the bailouts and will revolt, and investors will require huge incentives in the form of high yields to hold any debt, much less take a haircut.

It’s a bad time in the North Atlantic economy, but the speed of the markets demands a swift and bold response.  It’s time for leadership to trump political expediency.

Alexei Monsarrat is director of the Atlantic Council’s  Global Business and Economics Program.