Once again, Obama goes big and bold and wins admiration without evidence that his advice made any sense or did any good

Barack Obama is pressuring Spain to make austerity cuts as the European debt crisis rumbles on, it has emerged.

The U.S. President has also been credited with helping to save the Euro, after giving advice to European leaders on how to handle the debt crisis.

U.S. officials have been adamant that Europe must take the lead in resolving the crisis.

But amid fears for the impact on the American economy, behind closed doors the U.S. has been taking a far more active role.

Mr Obama and his aides have privately pressured European leaders to take bold action to calm the storm in financial markets.

Pressure: U.S. President Barack Obama has called Spanish Prime Minister Jose Zapatero to urge Spain to take 'resolute action'

Yesterday he called Prime Minister Jose Luis Rodriguez Zapatero to discuss the importance of 'resolute action' by Spain.

Spain's public finances, along with Portugal's, have caused the most concern after those of Greece, which secured a European bailout.

The White House said Mr Obama was actively engaged in ensuring that Europe's debt crisis did not hurt the global economy.

There are fears that the state of the economies in Portugal, Spain, Italy and Ireland - who all currently have high levels of debt - could stall the U.S. economy just as it was beginning to improve.

Former Treasury and White House official Tony Fratto said: 'We're in a slow growth recovery. It would not take much to get growth down to zero or 1 per cent.'

Mr Obama has held phone calls with German Chancellor Angela Merkel and French President Nicolas Sarkozy about the European crisis in recent days.

The message was clear: Act boldly.

American officials urged that Mr Sarkozy and Mrs Merkel recall the U.S. lesson of 2008-2009 when the Bush administration persuaded a reluctant Congress to approve a massive $700 billion Troubled Asset Relief Program.

While politically unpopular, the U.S. rescue plan convinced markets that authorities were serious about keeping banks afloat.

"The sight of the gallows concentrates the mind," but not in Washington, D.C., or California

LISBON/BRUSSELS (Reuters) – Portugal became the latest euro zone country to announce austerity measures to rein in a ballooning budget deficit on Monday as debt-stricken Greece urged global action to curb speculation in credit default swaps.

The European Commission said it was prepared to propose the creation of an IMF-style European Monetary Fund to cope with future debt crises in the euro single currency zone.

German Chancellor Angela Merkel said she favored the idea, which she said would require a change in the EU treaty, but the European Central Bank's chief economist branded it illegal.

EU sources said finance ministers of the 27-nation bloc would discuss ways to dampen speculation in the sovereign CDS market at their next meeting on March 16.

Hedge funds have been accused of aggravating the Greek debt crisis by so-called "naked short selling" -- betting on a default without owning the underlying Greek bonds, hence forcing up Athens' borrowing costs. [nWLB9439]

Greek Prime Minister George Papandreou, who took draconian austerity measures last week to stem attacks on his country's debt, called credit default swaps a "scourge" that threatened the Greek and global economy and asked the United States to join Europe in action on the issue.