Only a clear signal that Greece is prepared to knuckle down and pay its debts will settle the nerves of jumpy investors
Markets want certainty from the Greek elections. Only a clear signal from Athens that the Greek people are prepared to knuckle down and pay what's left of their debts will settle the nerves of jumpy investors.
The Spanish bank bailout failed to calm fears that the eurozone is, if not close to breakup, then unable to prevent years of debilitating political wrangles and social unrest.
Within hours of the agreement, Madrid's borrowing costs started to rise and alarmingly, so did Rome's as lenders raised the interest rate on loans to Italy's government and banks.
Of the eurozone's 17 members, eight are in serious financial trouble. Three already depend on Brussels for new loans, including Greece, while Cyprus has signalled it may need a €20bn (£16bn) lifeline and Malta is deep in recession.
The Spanish bank deal is considered to be nothing less than a backdoor bailout and a possible prelude to a fully fledged loan agreement involving the troika of the EU, the European Central Bank and the International Monetary Fund.
Mario Monti's temporary administration in Rome won plaudits from the markets for arresting the country's annual overspend. However, his public spending clampdown has all but killed business confidence and produced the longest recession of the eurozone's more developed nations. Several major fund managers have voiced their renewed concern that Italy's finances remain vulnerable to collapse.
A technocratic Greek government led by Lucas Papademos negotiated a €100bn debt write-off earlier this year in return for a second bailout. Papademos, a former central bank governor, was in favour of sticking to the EU's strict rules governing tax rises and spending cuts, despite the upheaval and growing concerns that poor households were starting to scavenge for food.
Stock markets rebounded from the lows of last year when it appeared that Papademos had secured agreement among the major parties for the EU's austerity package.
But now markets fear that a vote to renegotiate the deal coupled with a threat to pull out of the currency union will prove a turning point. If Greece can hold Brussels to ransom then Ireland and Portugal will want better terms for their Brussels' loans. If Greece pulls out altogether then it sets a precedent for other countries.
So an outright win for a coalition made up of the centre-right party New Democracy and the centre-left Pasok is considered a necessary prerequisite for the survival of the euro. It would show that Greeks were resolved to stick with painful austerity measures and play their part in a longer term renegotiation of the EU rulebook.
