This can’t be good. From Walter Russell Mead’s blog:

The changes were sweeping indeed: the Chief of Staff and the heads of the army, navy and air force were all suddenly replaced.

Greece was under military rule following a coup in 1967 until 1974, and the experience left lasting scars.  It is not clear why the government felt these changes were needed now.  There is some question as to whether Prime Minister George Papandreou’s government can survive until the weekend as a significant number of party members have challenged the decision to call a referendum on the latest austerity program.

The opposition party says it will not recognize the civilian government’s orders in this matter. But will the military? Does Papandreou fear a coup? Does he fear the Greek-American swagger of James Poulos?

(I’m kidding about that. When James Poulos shaved off his sideburns, he lost the terror edge over world affairs. Sad, really.)

But seriously. Here, says Ambrose Evans-Pritchard, is what the world faces if Greece goes down, as seems now unavoidable:

Unless the European Central Bank step in very soon and on a massive scale to shore up Italy, the game is up. We will have a spectacular smash-up.

If handled badly, the disorderly insolvency of the world’s third largest debtor with €1.9 trillion in public debt and nearer €3.5 trillion in total debt would be a much greater event than the fall of Credit Anstalt in 1931. (Let me add that Italy is not fundamentally insolvent. It is only in these straits because it does not have a lender of last resort, a sovereign central bank, or a sovereign currency. The euro structure itself has turned a solvent state into an insolvent state. It is reverse alchemy.)

The Anstalt debacle triggered the European banking collapse, set off tremors in London and New York, and turned recession into depression. Within four months the global financial order had essentially disintegrated.

That is the risk right now as the reality of Europe’s make-up becomes clear.

UPDATE: ABC (Australia) reporting that Greece changes its military chiefs every two or three years, and Papandreou saying this was long planned. Doesn’t look like the opposition buys it, though. Would you? With your government on the verge of collapse, and the country two ticks away from sovereign default, would you really go through with cashiering all the heads of the armed forces? I dunno…