After a five-month hiatus, the EuroZone crisis is back. Spanish banks have been bailed out, the French have just elected an anti-austerity president, and the general election in Greece has witnessed the further empowerment of anti-austerity political parties. If a credible coalition cannot be formed, Greece will once again go to the ballot box, and it is predicted that the vote for the anti-austerity parties will increase. This will leave the German government and Greece's international creditors with three choices. First, they can back down on their austerity stipulations, but this creates a huge moral hazard in that other periphery EU members will want to do the same. Second, they can permit Greece to leave the euro. The problem with this is that there will be substantial costs involved with fighting the subsequent contagion. Third, they can create some sort of deal which buys more time. This, however, is only likely if the EU and its banks are unprepared for a huge default and the subsequent contagion. In my view, Greece's default and exit from the euro has been on the cards for nearly three years. The delaying tactics have simply bought time for the EU to prepare for exit from the euro and for EU banks to strengthen their balance sheets.
You can read Roger Bootle's perspective on the Greece issue here.