Ben Chu: Only optimists or Eurocrats believe the crisis is resolved

The risk is that spending cuts and tax rises will not bring down Greece's overall debt burden

Greece was the first eurozone nation, back in May 2010, to go bankrupt. It was the country that first exposed the fiction of the eurozone's "no bailout" rule. And it was the genesis of the eurozone torment in another way, too. Some maintain that the decision by the German Chancellor, Angela Merkel, to seek to impose losses on Greece's bondholders in October 2010 was the moment the financial panic spread to the rest of the eurozone.

It is said that when investors realised European sovereign bonds were not "risk-free", they ran for the exits, knocking over Ireland and Portugal in the process and almost taking down Italy, too.

So if it all started with Greece, will it end with Greece? Now that Athens has secured its second bailout, which means it will not have to default next month when it is due to repay €15bn, is the emergency winding down? Now that Greece's bondholders have accepted they will lose 70 per cent of their investment in Athens's sovereign debt, can the financial panic be said to be over? One must surely have to be either a supreme optimist or an EU official to believe such a thing.

Many analysts have pointed out that this deal between Greece and her European partners could unravel very quickly if Greek MPs backslide on their pledges to cut spending in the coming months. Yet the bigger risk is that all the spending cuts and tax rises demanded by Greece's European benefactors will simply not bring down Greece's overall debt burden. Two years of austerity have merely deepened Greece's recession, making her even less able to pay her way in the world. If the Greek economy does not bounce back as impressively as EU leaders claim they expect, Athens will soon find itself back at the table with its collecting tin. It is hard to envisage German, Finnish and Dutch politicians, who were so resistant to this latest refinancing, agreeing to yet another bailout.

And the longer that Greece remains on the rack of recession, the more powerful will grow the lure of a euro exit and devaluation. That prospect will cause fresh nerves in financial markets. It is not so much the thought of Greece breaking away from the single currency that concerns investors. They believe, perhaps foolishly, that Europe's financial system could withstand such a shock. What really keeps people awake at night is the fact that larger economies such as Spain and Italy might follow Greece through the exit door, unravelling the entire single currency.

In private, European leaders express frustration at how much grief a country that accounts for just 2.5 per cent of the eurozone's economic output has caused. But they are blaming the symptom, rather than the cause of the ailment. Greece's economic woes – excessive private sector wages, unsustainable public debt, restrictive labour markets, recession – are not unique. Spain, Portugal, Ireland and Italy are also suffering from a combination of the same. Greece was the alpha, but the omega of this crisis is still nowhere in sight.