Wet disc contraction to galactic blue nuggets and quenching to red nuggets

We study the origin of high-redshift, compact, quenched spheroids (red nuggets) through the dissipative shrinkage of gaseous discs into compact star-forming systems (blue nuggets). The discs, fed by cold streams, undergo violent disc instability that drives gas into the centre (along with mergers). The inflow is dissipative when its time-scale is shorter than the star formation time-scale. This implies a threshold of similar to 0.28 in the cold-to-total mass ratio within the disc radius. For the typical gas fraction similar to 0.5 at z similar to 2, this threshold is traced back to a maximum spin parameter of similar to 0.05, implying that similar to half the star-forming galaxies contract to blue nuggets, while the rest form extended stellar discs. Thus, the surface density of blue galaxies is expected to be bimodal about similar to 10(9) M-circle dot kpc(-2), slightly increasing with mass. The blue nuggets are expected to be rare at low z when the gas fraction is low. The blue nuggets quench to red nuggets by complementary internal and external mechanisms. Internal quenching by a compact bulge, in a fast mode and especially at high z, may involve starbursts, stellar and active galactic nucleus feedback, or Q-quenching. Quenching due to hot-medium haloes above 10(12)M(circle dot) provides maintenance and a slower mode at low redshift. These predictions are confirmed in simulations and are consistent with observations at z = 0-3.