Athens bourse collapsing in chaos as Samaras faces dwindling support: Greece rapidly becoming a dagger pointed at the euro’s heart.

With a further 3.2% fall in the Hellenic bourse this morning, the Athens stock exchange has now seen almost a quarter of its value wiped off in just five days of trading. In terms of local effects within Greece, frankly what the bourse does there is irrelevant: Greece is such a basket-case after five years of brainless austerity, corrections to the value of large companies aren’t the big worry. What’s exercising the Eunatics in Brussels and Draghi in Frankfurt is that a defiant Alexis Tsipras may well be the Greek Prime Minister by the end of January 2015.

On this subject, there’s a welcome return to form by Ambrose Evans-Pritchard at the Telegraph site, spelling out just how big a problem the Troika has served up for the euro thanks to its actions in Greece. A quick ring-round to Athens sources this morning supports every assertion AEP makes in the column: Samaras no longer has the credibility in the Parliament, and stands a better than evens chance of losing the crucial Presidential nomination vote. Under the Greek constitution, that means a snap General Election, with the left-of-centre Syriza Party led by Alexis Tsipras well ahead of New Democracy led by Antonis Samaras.

The stakes couldn’t be higher than they are at the moment. A scenario in which Tsipras came to power and forced huge Greek debt relief upon the ECB-EC-Berlin axis (his promise to do this remains unequivocal) would damage support for the euro in Germany, and immediately result in Italy and Spain demanding the same deal. The immovable object is about to be hit by the unstoppable force. Whatever Brussels-am-Berlin chooses to do in that context, they’re damned: throwing Greece out would cause chaos in the currency markets and see yet more capital flight from the eurozone; but caving in to Greek demands would, in short order, make the collapse of the EU as we recognise it a near-certainty.

Much bigger than any of this, however, is a rapidly dwindling confidence across the Globe in the mystical recovery. QE has enabled snake-oil selling Wall Streeters to pocket a fortune on share gains…but it is a misguided belief in economic turnaround that has suckered the money in. We are now facing the strong possibility of three panic-inducing turds hitting the fan all at once:

The Bundesbank/ECB standoff + the oil-price/OPEC collapse + approaching anarchy in the EU

Economic data continues to be dire, or at best contradictory. Everything is about confidence in the end: and as The Slog has always maintained, there is no such thing as a gradual panic. The cost of Greek borrowing already exemplifies this: yields on three-year Greek bonds rocketed 300 basis points to 9.52% in the last 48 hours.

Another interesting extract from AEP’s piece is this one:

I don’t read Italian so I’ve never seen this book…but it confirms exactly what I was told at the time. The link you can follow here is to a blog The Slog posted on July 23rd 2012, in which I pointed out:

Wrong in the second part…but only because Geli ‘relented’ in the light of the Italy/Spain fiasco. Every leak I heard or saw at that time suggested a strong conviction that the Merkeschäuble were hell bent on ejecting Greece. In fact, Schäuble himself wanted to go ahead anyway…because, as a well-informed spook, he knew of the American intentions in relation to an ejected Greece. After her final rejection of the idea, relations between Merkel and Schäuble were tense for many months,

Funny, is it not, how so-called ‘conspiracy theory’ often winds up being vindicated by the facts. But we mustn’t indulge in any of those, must we? Otherwise, the Cameroid NVE cops will be on our case.

And one final thought: chuck a collapsing EU/euro into the heady brew fermenting in UK politics next year, and it could change every rule in the game.

Related at The Slog: Idiots and consequences & All Quiet in the Eunatic asylum