Looming Large: The Euro Crisis Is Back

It is perhaps fitting that it is Greece, the ancient home of democracy, that has delivered the most damning public verdict on austerity, bailouts and the euro.

Much of the attention ahead of Sunday's elections was focused on France , and Francois Hollande's anticipated defeat of Nicolas Sarkozy.

But while the election of a mildly anti-austerity president in France will beg questions of the Franco-German nexus at the centre of the single currency, it is what happened in Athens that is of far more immediate concern.

There are two concerns: one practical and immediate, the other more fundamental.

The former is that Greece looks unlikely to be able to muster a coalition government strong and stable enough to push through the austerity measures necessary for it to continue being drip-fed bailout cash from the International Monetary Fund and European Commission.

In order to satisfy the terms of the bailout (the second or third depending on how you count these things), Greece needs to lay out plans for an extra 7% of GDP budget cuts by June.

Given that is on top of the country's biggest austerity drive since the Second World War, it is pretty inconceivable to achieve this without a government firmly behind the cuts.

But Sunday's election has made that nigh on impossible.

The two parties that have signed up to the austerity plans and the IMF bailout received only one in three of the votes cast. The Pasok party which had until last week ruled Greece, was pushed into third place by the Syriza party which is adamantly against the bailout plan.

The upshot is that New Democracy, which won most seats, will try to create a coalition over the coming days with Pasok, but there is no guarantee that it will succeed.

And little hope that it will be a strong enough coalition to push through a controversial series of cuts. Which means one of two things: either a fresh set of elections (the earliest feasible date is June 10) or a renegotiation of the bailout, which would once again raise the question of whether Greece can survive within the euro.

The other, deeper concern raised by the Greek elections derives from the fact that a swathe of marginal and extremist parties succeeded in gaining seats in parliament, including the Neo-Nazi thugs of Golden Dawn party.

It is not merely that the Greeks voted against austerity: they voted, in droves, against the entire central political fabric of the country.

This is what happens in periods of depression: as the economic misery grinds on (these things always last far longer than expected), the centre right and left parties are, in turn, discredited, and people look elsewhere for answers and solutions.

That is precisely what Angela Merkel and Nicolas Sarkozy feared when they installed Lucas Papademos as an unelected interim leader of the country. Now it has become a reality. And it is difficult to imagine, if there are elections later this summer, that the result would be dramatically different.

Against such a backdrop it is hardly surprising that when markets opened after the poll results , share prices in Athens fell by the most since the very worst days of the crisis, when Lehman Brothers collapsed in 2008. Nor that they have fallen across most of Europe, or that the borrowing costs for periphery euro nations have risen.

The message is clear: the euro crisis is back.

The question of Greece leaving the euro. The question of whether France and Germany can work together to salvage the currency. The question of what this means for the wider European Union.

None of these questions had ever really gone away, but now they will loom large for us again this summer.