Problem in the euro zone

It would be incorrect to conclude that the formation of a new government in Greece categorically pre-empted the looming Greek tragedy which threatened the entire euro zone. Europe is by no means safe, although the Greek electorate’s narrow pro-euro preference is clearly better than the alternative that would have triggered potentially catastrophic chain reactions.

It’s a relief but at best a very temporary one. The pro-bailout coalition doesn’t represent a decisive turning point. It’s merely a brief intermission in the unfolding drama. Europe was spared an immediate crash but the deep divide remains between its wealth-generating northern economies and the welfare-reliant south.

Hence initial upbeat responses were short-lived. Early gains for the euro and Spanish and Italian bonds soon evaporated. The continuing plot line promises hair-raising twists and turns.

Dangerous as the Greek situation still is, it may - hyperbole and doomsday scenarios notwithstanding - prove to be the least of Europe’s worries.

What will ensue in Spain, Italy, Portugal and Ireland is anyone’s guess.

This is foremost a glaring European failure. The EU superstructure, in which separate economies are excessively interconnected, couldn’t prevent countries with over-sized public sectors from cooking up their books to the European collective’s detriment.

The entire euro zone may yet be terminally destabilized.

Unfortunately, no facile formula exists for the EU’s greatest-ever predicament.

In such circumstances there may be no sidelines and no safe vantage points.