There would be massive global pressure on Europe to handle the exit in a grown-up fashion, with backstops in place to stabilize Greece. The IMF would step in.

The German finance ministry is already drawing up such plans, and quite correctly so (unfortunately roping in the British too to spread the losses, which is a thorny subject).

Needless to say, the real danger is contagion to Portugal, Ireland, Spain, Italy, Belgium, France, and the deadly linkages between €15 trillion in public and private debt in these countries and the €27 trillion European banking nexus.

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Greece may be forced to leave the euro if the country refuses to implement spending cuts agreed with the European Union, Angela Merkel warned.

Raising the spectre of a Greek exit, the German chancellor said “solidarity for the euro” was threatened by the ongoing political crisis in Athens.

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The euro crisis is entering its final stages. Economic pain is now interacting with political resistance to produce intense financial pressure. I expect Greece to leave the euro ”“ and perhaps very soon.

It could happen voluntarily, but both the Greek people and Greek politicians are still clinging to the idea that they can put an end to austerity yet still stay in the euro. In order to try to achieve that, a new government may call the eurozone’s bluff.

At that point, the other eurozone members would face an awkward choice. Doubtless there would be voices in favour of providing the money, willy nilly. That might well be the French position. But if the eurozone gives way on this, what chance would there be of painful austerity being continued, not just in Greece but also in Portugal, Spain, Italy and Ireland? The northern countries would face the prospect of pouring money into a bottomless pit.

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Speaking exclusively to The Sunday Telegraph, Theodoros Pangalos said he was “very much afraid of what is going to happen” after Greek voters rejected the deal in elections last Sunday.

“The majority of the people voted for a very strange mental construction,” he said. “We want to be in the EU and the euro, but we don’t want to pay anything for the past.”

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The chief danger is not for Greece. It is for the rest of the eurozone. If the German political establishment is unwise enough to force Greece out of EMU on the assumption that the country is a special case, it will be disabused of this illusion very quickly.

Total debt levels are 100pc of GDP higher in Portugal, and the country has roughly the same current account deficit. The only difference is that Portugal began its austerity death cure later and has not yet had time to enter into the full vortex of debt-deflation and collapse. Give it a few more months.

Spain and Italy are 20pc overvalued against northern Europe….

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J.P. Morgan Chase & Co. told traders several months ago to make bets aimed at shielding the bank from the market fallout of Europe’s deepening mess. But instead of shrinking the risk, their complicated bets backfired into losses of as much as $200 million a day in late April and early May, people familiar with the situation said.

Regulators in the U.S. and U.K. are examining what went wrong, who is responsible and whether J.P. Morgan should have told investors about the losses sooner, according to people familiar with the matter.

While attention has focused on large positions taken by a trader nicknamed “the London whale,” he and other traders were carrying out instructions from a bank executive, these people said.

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God of life made new in Christ, who dost call thy Church to keep on rising from the dead: We remember before thee the bold witness of thy servant Nicolaus von Zinzendorf, through whom thy Spirit moved to draw many in Europe and the American colonies to faith and conversion of life; and we pray that we, like him, may rejoice to sing thy praise, live thy love and rest secure in the safekeeping of the Lord; who livest and reignest with thee and the Holy Spirit, one God, now and for ever. Amen.

“We don’t wish to express any opinion on the result, but there is a satisfaction when our values are evoked by the future president of the country,” said Muriel Menanteau, a spokesperson for the Protestant Federation of France, which represents more than 800,000 of the 1.2 million Protestants in the country.

The federation had held a meeting with Hollande during the campaign because of his support of secularism and had given him a document calling for a return to facts and accuracy by “leaders in the political, economic and social spheres.” It also implicitly criticized the targeting of immigrants and Muslims that had taken place in the run-up to the two rounds of the elections.

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Greece’s political turmoil showed no signs of abating Tuesday as hopes faded that leading political parties can form a coalition government after Sunday’s splintered election result, increasing the possibility that Greeks will be called back to the polls as early as next month.

The inconclusive vote and ensuing coalition talks, combined with concerns about the emergence of a Socialist president in France who opposes German-led austerity measures for the euro zone, has revived speculation that Greece would leave the euro, stoking new worries about the fragility of Europe’s monetary union.

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Europe is a mess ”” politically, economically, fiscally, economist David Rosenberg said Monday.

“In less than two years, we are now up to a total of seven European leaders or ruling parties that have been forced out of office, courtesy of the spreading government debt crisis ”” tack on France now to Ireland, Portugal, Greece, Italy, Spain and the Netherlands. Even Germany’s coalition is looking shaky,” the Gluskin Sheff economist wrote in his note Monday.

“This is quite a potent brew ”” financial insolvency, economic fragility and political instability.”

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My own view is… [that] the German deflation regime is – in the current circumstances – the greater threat to Greco-Latin societies, and to post-War comity in Europe. Sometimes you have to go through a cathartic trauma to break free.

But it is also true that Germany’s own democracy may turn fractious if policy strays too far from German needs and Grundgesetz. This is EMU’s curse. It destabilizes each nation state in turn, each in different ways – a “negative sum game”.

The worst of all worlds would be a nasty spat between Mr Hollande and Chancellor Angela Merkel that poisoned the atmosphere without bringing about any substantive change to Europe”˜s “asphyxiation compact”.

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Greece’s center-right New Democracy party looks set to get the first chance to form a new government Monday, but party leader Antonis Samaras will have a complicated task after an election where angry voters punished politicians for backing harsh government budget cuts.

No party is likely to have anything approaching a majority, leaving the politically and economically volatile nation even more in flux.

The Greek stock market plunged about 7% Monday morning….

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French President-elect Francois Hollande is to start work on forming a new government, after declaring to his supporters that his victory gave hope there would be an end to austerity.

Mr Hollande has vowed to rework a deal on government debt in eurozone member countries to focus on promoting growth.

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German Chancellor Angela Merkel can’t be pleased about François Hollande’s election victory, but it will at least be bearable for her. The newfound self-confidence of her junior coalition partner, the FDP, which scored a surprise success in the state election of Schleswig-Holstein on Sunday, poses a greater threat to the chancellor.

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Much depends on the reaction of investors in debt issued by European nations, said Dimitri Papadimitriou, president of the Levy Economics Institute at Bard College. If they fear that the crisis response is losing momentum, they will likely demand higher interest rates ”” not just from Greece, but from other nations seen as carrying too much debt.

The result would be rising borrowing costs for Greece as well as countries that haven’t received bailouts, like Italy and Spain. Rising borrowing costs sent global stock markets diving last year. Uncertainty about the path forward in Europe may mean a return to extreme market volatility after several months of relative calm.

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Francois Hollande, the former leader of France’s Socialist Party, has been elected president of France, defeating incumbent Nicolas Sarkozy.

Despite being one of France’s best known politicians, the 57-year-old Hollande has never held a position in the national government.

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Greek conservatives won at the polls Sunday in a national election but fell far short of enough seats to take power, deadlocking parliament and deepening unease over the country’s economic future and its continued membership in the Eurozone.

With 30% of the votes counted, Antonis Samaras and his center-right New Democracy party had 20.3% of the vote, far from the support needed to secure an outright majority in Greece’s 300-seat parliament. The Socialists took a brutal beating, with support for their new leader and former Greek finance minister, Evangelos Venizelos, plummeting to 14.1%, down a shocking 30 percentage points from the party’s landslide victory in 2009.

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No new surveys have been allowed to be published for two weeks and pollsters warn the result may be a surprise.

“We voted for them since the 1980s and we feel cheated,” municipal worker Christina Theodorakou, 50, said of the two big parties. She has seen her monthly salary cut by 500 euros since the crisis began.

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The final polls before France’s presidential election on Sunday show President Nicolas Sarkozy making up ground on Socialist challenger Francois Hollande – but still predict a Hollande victory.

Mr Sarkozy on Friday predicted a “surprise” and Mr Hollande urged his voters to avoid complacency as the bitter campaign neared its climax, driven by fears about joblessness, immigration and France’s economic future.

A poll by the BVA agency shows 52.5 percent support for Hollande and 47.5 percent for Sarkozy. A poll by the agency CSA shows 53 percent for Hollande and 47 percent for Sarkozy.

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At least twenty million French ”“ around half of the French electorate ”“ tuned in to watch Mr Sarkozy fight for his political life and see whether he would make good his pledge to “atomise” his left-wing rival during the almost three-hour clash.

Trailing Mr Hollande in the polls by at least seven points ahead of Sunday’s presidential runoff, this was the Right-winger’s best hope of catching up to defy the odds.

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The French-led counter-attack and rumblings of revolt through every branch of the EU institutions last week have brought this aberrant phase of the eurozone crisis to an abrupt end.

“It’s not for Germany to decide for the rest of Europe,” said François Hollande, soon to be French leader, unless he trips horribly next week. Strong words even for the hustings.

“If I am elected president, there will be a change in Europe’s construction. We’re not just any country: we can change the situation,” he said.

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On Monday, a 38-year-old geology lecturer hanged himself from a lamp post in Athens and on the same day a 35-year-old priest jumped to his death off his balcony in northern Greece. On Wednesday, a 23-year-old student shot himself in the head.

In a country that has had one of the lowest suicide rates in the world, a surge in the number of suicides in the wake of an economic crisis has shocked and gripped the Mediterranean nation – and its media – before a May 6 election.

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A rupture between France and Germany would come at a dangerous time. Until recently, voters in the euro zone seemed to have accepted the idea of austerity and reform. Technocratic prime ministers in Greece and Italy have been popular; voters in Spain, Portugal and Ireland have elected reforming governments. But nearly one in three French voters cast their first-round ballots for Ms Le Pen and Mr Mélenchon, running on anti-euro and anti-globalisation platforms. And now Geert Wilders, a far-right populist, has brought down the Dutch government over budget cuts. Although in principle the Dutch still favour austerity, in practice they have not yet been able to agree on how to do it…. And these revolts are now being echoed in Spain and Italy.

It is conceivable that President Hollande might tip the balance in favour of a little less austerity now. Equally, he may scare the Germans in the opposite direction. Either way one thing seems certain: a French president so hostile to change would undermine Europe’s willingness to pursue the painful reforms it must eventually embrace for the euro to survive. That makes him a rather dangerous man.

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Spain’s sickly economy faces a “crisis of huge proportions”, a minister said on Friday, as unemployment hit its highest level in two decades and Standard and Poor’s weighed in with a two-notch downgrade of the government’s debt.

Spain’s unemployment rate shot up to 24 percent in the first quarter, the highest level since the early 1990s and one of the worst jobless figures in the world. Retail sales slumped for the twenty-first consecutive month.

“The figures are terrible for everyone and terrible for the government … Spain is in a crisis of huge proportions,” Foreign Minister Jose Manuel Garcia-Margallo said in a radio interview.

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With Socialist leader Francois Hollande likely to become the next president of France, Europe’s hot populist anger is about to confront the cold austerity measures required by the euro zone, with a predictable result: a storm that rattles the foundations of the European economic house.

Financial traders and treasury ministers are debating this week just how much damage this political-economic collision will bring. Some argue that it could take down the structure entirely. Others insist that Germany, for all its insistence on austerity, will never let the structure collapse ”” and will make the necessary concessions to keep the common currency intact.

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The UK is back in recession after a surprise 0.2% contraction in the economy in the first quarter of the year, official figures revealed today.

The decline in gross domestic product (GDP) was driven by the biggest fall in construction output for three years, while the manufacturing sector failed to return to growth, the Office for National Statistics (ONS) said.

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In a rare concession, the German Chancellor admitted that austerity alone would not solve the crisis but she insisted that the wave of political opposition to fiscal discipline was wrong.

“We’re not saying that saving solves all problems,” Ms Merkel said at a conference in Berlin. “[But] you can’t spend more than you take in. You can’t live your whole life this way. Everybody knows this.”

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When it was over, and the balloons had shriveled and the whistles had faded away, Lionel Messi put his hands to his head. Messi, the slick, slippery forward, was rooted to his spot: it was as if he could not believe what he was seeing.

He was not alone. Around him, the Chelsea players threw their arms over one another, hugging in equal parts glee and exhaustion, while the Barcelona players only stared, as if overwhelmed by two sobering truths: on this day, Messi, perhaps the greatest player in the world, could not score. And Barcelona, perhaps the greatest team in the world, could not win.

Instead it was Chelsea, despite playing a man short for nearly an hour in front of a frenzied crowd at the Camp Nou stadium, that advanced to the Champions League final.

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Barring some kind of cataclysmic collapse””aliens landing at the training ground and kidnapping half the squad might do the trick””Real Madrid will win its 32nd Spanish title this year. Saturday’s 2-1 win at archrival Barcelona left Jose Mourinho’s crew with a seven-point lead and four games to play, which means arithmetic is the only factor delaying Real’s coronation.

Real Madrid could well have lost at Camp Nou and still won La Liga. But actually defeating its eternal rival is something of a game-changer. Mourinho may not admit it, but he didn’t just get a monkey off his back, he banished a whole pack of screaming orangutans.

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