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 the United States and other central banks.

Closer to home, 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 off their company financial 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 writedowns as the Australian Securities and Investments Commission 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 reduces the returns of Australia's $1.3 trillion retirement savings.

The brutal reality is local and global equity markets have been living in fear for the past three years and that won't 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 policymakers 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 of the eurozone and destabilising 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 being months away from requiring its own rescue plan.

The situation has got to a point where everyone, even people who normally don't keep up-to-date on the state of play in global economics and politics, have an opinion on what should be done. Unfortunately nobody has an answer, which has battered confidence around the world, heightened an already volatile market and 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 is a ticking bomb that has the potential to spread like wildfire.

Since the euro crisis first reared its head three years ago, there have been a series of European bailouts with draconian austerity-type conditions attached. The latest was targeted at the Spanish banks. What made this bailout different was that no one, except Spain, has said what the conditions will be. Spain, which a week before the bailout was announced swore black and blue that no bailout was required, said there will be minimal conditions attached to it. Not surprisingly, few believe the Spanish and expect the conditions to be revealed after the Greek elections.

If the Greeks elect a pro-austerity ticket and then there is a large gap between the conditions imposed on each country. and the Greeks feel they voted without knowing the truth, the social unrest will intensify.

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.

The crisis in confidence has dampened the appetite to trade in equities, with the average value traded in Australia at $4.5 billion a day, its lowest level in six years.

Last Thursday it fell as low as $3 billion. Such low volumes going through the market is playing havoc with stockbrokers, many hanging on by a thread. If conditions don't improve in the next few months, it will trigger another round of consolidation in an already shrinking industry.

Some stocks are trading at record lows. In the case of CSR, it closed on Friday at a new 25-year low as investors continue to bale out of the stock. CSR isn't alone. But sadly it doesn't have a lot of places to go as the assets that are left in this shrinking empire still have the asbestos poison pill, albeit in a much smaller wrapping. Even with no debt, that would slow down some interested parties from making a takeover bid.

While some of the share-price falls are tax-loss selling ahead of the close of the financial year, most of it is a symptom of so much negativity.

What happens in Greece over the next few weeks, followed by Spain and Italy, will dominate everything. Let's hope that sense prevails and that governments and the global financial system are well prepared. With the crisis going on for so long, they certainly ought to be.