The next few days will be high stakes on global financial markets as the results of the Greek election are digested, and just as importantly, the G20's reaction to the outcome of the election, along with that of central banks.
The Australian equity market will remain skittish as investors grapple with so many global unknowns, as well as the potential for more local profit downgrades as company boards sign their company accounts for the June 30 year.
Companies that have suffered big share price falls in the past few weeks are the ones most likely to announce profit downgrades or big asset write-downs as ASIC has been reminding companies of their accounting rule obligations when it comes to asset impairment charges.
In the past year the All Ordinaries index has fallen almost 10 per cent, which has a knock-on effect on the annual financial year performance of super funds, particularly balanced funds, and reduce the returns of Australia's $1.3 trillion retirement savings.
The brutal reality is that local and global equity markets have been living in fear for the past three years, and that will not change in the short term.
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 behaviour 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 destabilisation of the world economy.
It is reaching a critical point were the problem is far greater than getting the right government to run Greece. Spain is in trouble and Italy looks likely to be months away from requiring its own rescue plan.
Unfortunately nobody has an answer, which has battered confidence around the world and heightened an already volatile market and has started to create social unrest in some European countries.
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.
In Australia, the problems in Europe have had an impact on market sentiment, confidence, credit markets and the dollar. If the problems get worse, they will ripple through China, one of Australia's biggest trading partners, as well as the US, which is already suffering from its own issues.
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.
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