This would mean a dramatic rebalancing of German, European - indeed global - politics.

Some are gleeful about the prospect. Many are gloomy. But all are jumping the gun.

There's one big problem with this theory.

Angela Merkel.

There is no doubt that her authority is weakened. But most Germans still want "Mutti" (mother) in charge. And it is just not in Merkel's character to walk away from that.

In September's election the far right AfD (Alternative for Germany) gained an historic foothold in parliament - "real Nazis in the German Reichstag for the first time since the end of World War Two", as one politician put it.

Merkel's centre-right CDU emerged the biggest party, though with its lowest vote since 1949. Merkel was asked by the country's president to try to form a government.

The centre-left SPD insisted it would not return to "grand coalition" with the CDU, preferring to use opposition to rebuild its own support.

Merkel would never consider governing with the AfD.

The only other option is a "Jamaica coalition", the Greens, the "yellow", small-government, pro-business liberal Free Democratic Party and the "black" CDU.

It was always going to be tricky. The FDP and the Greens are opposed on refugees, energy and economic policies. And these turned out to be deal-killers.

FDP leader Christian Lindner walked out of coalition talks on Sunday night, saying they wouldn't "abandon our principles" and embrace an agenda they did not believe in.

"It is better not to govern than to govern badly," Lindner, (an ambitious, charismatic 38 year-old) said.

"Merkel is finished," said far right AfD co-leader Alice Weidel, taking credit for preventing the coalition from taking power.

The line was echoed and amplified in the alt-right media, and by pro-Brexit politicians in the UK who claim a Mutti-free Germany would mean an easier ride and bigger divorce concessions.

"May told to exploit Merkel crisis to reduce Brexit bill" read the front page of The Times in London, next to a stock photo of Merkel with her hand on her forehead (she's been around long enough for picture editors to have a handy collection of Merkel's range of emotions).

Some went absurdly overboard. Political commentator for the Spectator Andrew Neil called it Germany's "biggest political crisis since [the] late 1940s", which would include, say, the fall of the Berlin Wall.

Back in reality, there are plenty of ways Merkel can emerge from this as chancellor.

For a start, don't rule out a last-minute coalition.

After the last election in 2013 it took 86 days to form a Cabinet - and that was just two parties wrangling.

The deadline for an agreement - last Friday - was arbitrary, imposed by Merkel.

President Frank-Walter Steinmeier, who will actually have to make the decision to call elections, has told the parties it is their "responsibility' to try again, partly to reassure Europe and the world of their democracy's stability.

"I expect the parties to make the formation of a new government possible in the foreseeable future," he said.

He is meeting the leaders of all the main parties this week, instructing them to keep trying for a coalition.

And he is expected to keep pushing until well into December. He's rightly concerned that another election would confirm the status quo and solve nothing.

There are also signs of wavering in the SPD. Though most of the party's supporters don't want a grand coalition, the lure of power is strong. Some party figures are already questioning the decision to insist on new elections, which might provoke a voter backlash.

The SPD's failed chancellor candidate Martin Schulz has continued to insist they are "unavailable" for a coalition and that voters must be allowed to "reassess what is going on". But his authority is weakened by the terrible election result.

Failing a coalition deal, the president may ask Merkel to form a minority government and haggle her way through her term, law by law.

On Monday Merkel said "I don't have a minority government in my plans" and thought new elections would be "the better way."

But if in the end Merkel is asked to form a minority government, she may reluctantly agree. She is a respected deal maker with a preference for consensus over ideology - in other words, the ideal minority chancellor.

And if there are new elections, don't rule Merkel out then, either.

A snap poll by ARD found a majority of Germans regret the end of Jamaica, and that 32 per cent blame the FDP for the collapse of talks compared with just 9 per cent blaming Merkel's party.

And 58 per cent want Merkel as chancellor again, compared with 41 per cent who don't. If they see voting CDU as the only way to make this happen, protest voters might return to the fold and give her party a thumping boost in a second election.

"When people asked me, on the campaign trail, if I was ready to serve Germany for four more years, I always said that I was," Merkel said. "I see no reason to go back on that promise."

Without a new government, Merkel will remain chancellor. And with one, there's a very good chance she will still be at its head.