After dithering for several hours, European leaders held a late-night press conference to announce a large deal that they hope will stabilize the economies of the euro zone. Bloomberg has the details and the numbers are eye-popping:

European finance ministers put together an unprecedented loan package that may be worth 720 billion euros ($928 billion) for debt-swamped governments in a bid to restore faith in the euro and prevent Greece’s fiscal woes from unleashing a global crisis.

Jolted into action by last week’s slide in the currency to a 14-month low and soaring bond yields in Portugal and Spain, the 16 euro governments pledged to make 440 billion euros available, with 60 billion euros more from the EU’s budget, said Spanish Economy Minister Elena Salgado at a press conference in Brussels today. The International Monetary Fund may provide a further 220 billion euros, she said.

“We are placing considerable sums in the interests of stability in Europe,” Salgado told reporters in Brussels after chairing the 14-hour meeting.

Apparently the US and China were approached and asked to contribute to the fund, and they both declined. America will actually contribute through their share of the IMF, however.

This certainly looks like the European Central Bank has recognized the scope of the problem and the need for a commensurate response, although we’ll wait for the full details. The ECB will intervene in the secondary markets, according to the EU Economic Commissioner, but that’s a bit vague. In addition, Portugal and Spain have agreed to “take steps” to reduce their budget deficits. If they react with as savage a plan as Greece put into place, however, the contagion of rioting from the population could spread.

The New York Times relates it to the US bailout of the financial sector. Their whole story is worth reading for a good overview of the situation.

Perhaps the conservative defeat in German elections roused the ruling party to take control of the sovereign debt crisis in Europe, lest they lose power completely.