Beware Greeks Bearing Gifts says Economist Shayne Heffernan

What happens in Greece over the next few weeks, followed by Spain and Italy, will dominate everything. Let's hope sense prevails and governments and the global financial system are well prepared. With the crisis going on for so long, there certainly ought to be, but history has taught us not to believe they will be ready.

Do not go buying in to any news reports that the Greek dilemma is over after the elections. Greece will still see its public debt-to-gross-domestic-product ratio rise toward 170% in 2013, an impossible situation without remedy.

World markets have been praying for a fairytale ending to the European crisis. What they have got is an unfolding nightmare that has left policy makers hoping that whatever the outcome of the Greek elections today, Greece will remain in the eurozone.

Ultimately, Greece will leave the euro, and the outcome of today's election is unlikely to temper that inevitability. Who wins the election will merely determine the speed. If the pro-bailout New Democracy Party claims victory, Greece's departure will be slow; if the extremist Syriza wins, it will be accelerated, and if there is an inconclusive election outcome, the timing of its departure will be unpredictable.

But in the short term, the behavior of markets will depend on the effectiveness or otherwise of the G20 meeting in Mexico today, where the focus will be on how to prevent an immediate breaking up the eurozone and destabilization of the world economy.

Greece is almost ungovernable these days, a function of its bankruptcy, the collapse of proper institutional structures, chronic tax avoidance, an alarming decline in living standards and the abandonment of hope.

But the problem is wider than economics. Social unrest has the potential to spread like wildfire.

The exit polls showed that the conservative New Democracy party is projected to win between 27.5 and 30.5 percent of the vote while the anti-bailout radical left Syriza party may get 27 to 30 percent.

Syriza head Alexis Tsipras has vowed to cancel the terms of Greece's international bailout deal and repeal its austerity measures - a move many think will force Greece to leave the 17-nation eurozone. New Democracy leader Antonis Samaras says his top priority is to stay in the euro but renegotiate some terms of the bailout.

Whichever party comes first in Sunday's vote gets a bonus of 50 seats in the 300-member Parliament.

As central banks stood ready to intervene in case of financial turmoil, Greece held its second national election in just six weeks to try to select a new government after an inconclusive ballot on May 6.

The two parties vying to win have starkly different views about what to do about the (EURO)240 billion ($300 billion) in bailout loans that Greece has been given by international lenders. One wants to tear up the deals and void the harsh austerity measures demanded by lenders that have caused Greek living standards to plummet. The other backs the bailout deal but wants to amend it.