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Sunday's Greek election saw a narrow victory for the "New Democracy" party, which wants to try to continue to work with the rest of the euro zone on a bailout-plus-austerity plan.
Thus, Greece and world markets dodged a potential bullet in the form of an aggressive new government that might have led to bank runs and forced the rest of Europe to kick Greece out of the euro zone.
That withdrawal, many analysts think, would be catastrophic for the already demolished Greek economy. And, more importantly for the rest of Europe, it would likely hasten the spread of panic to Spain, Italy, and other European countries that everyone assumes will soon be the beneficiaries of another round of bailouts.
But the Greek election can also be looked at differently: The revolutionary party almost won. And now that the "status quo" has been preserved, the situation in Greece is likely to get worse. So when the next election comes around--and it could be soon if the tenuous majority in the Greek government fails to hang together--the more aggressive party may well win.
Meanwhile, the only solution to the broader problems in the euro zone is either true fiscal integration, in which a central authority is given the ability to issue Eurobonds, tax individual countries, and control spending in those countries, or a breakup. The current system, in which all the euro zone countries use the same currency but still have to borrow and spend as separate entities, just is not working.
CNBC's Chief International Correspondent Michelle Caruso-Cabrera says that there is still hope in both Greece and the rest of Europe that integration can be achieved. She also says that change is happening, albeit slowly. (A few years ago, she reports, most people in Greece didn't even understand the difference between the "private sector" and "public sector." Now there is widespread understanding that taxation has to pay for the latter.)
World markets initially cheered the Greece news, but that sense of relief was short-lived. Now the focus has returned to the fact that nothing in Europe has been solved, that Greece is still in a Depression, and that Spain, Italy, and other countries have huge problems to solve.
Last week, there was talk of a coordinated central-bank bailout if the Greece election turned out the wrong way. Now, markets appear to want that bailout regardless.
