A continent watches intently. Experts comment on the developments in hushed tones while in the streets there are clashes, outbursts of anguish and, periodically, crowds erupting in frenetic applause.

Throughout it all, Germany is imperious. Greece wobbles, perilously close to the exit, but avoids catastrophe.

The men at the centre of the action are not politicians or bankers (although many are as rich as bankers), but soccer players.

This is Euro 2012, which is both a month-long tournament bringing together the 16 best soccer teams in Europe and a distorting funhouse mirror of the continent’s current economic crisis.

In 2004, Greece, to the stupefaction of almost all, won this tournament. It had just joined the eurozone a couple of years earlier and was about to host the Olympics. For Greeks, this was a moment of huge national pride and jubilation.

This month, they find themselves once again the centre of European attention. As its team ran on the soccer field, its nearly 10 million eligible voters shuffled into their second national election in six weeks, its outcome key to the future of the continent’s currency and economic health.

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The whole world was watching as Greeks went to the polls, again, on Sunday in what was effectively a referendum on keeping the euro. (Yorgos Karahalis / Reuters)

Like Euro 2012, the European economic crisis is building to a climax. 

First comes the semi-final: the G20 meeting on Monday and Tuesday in Mexico that brings together the top European leaders along with Barack Obama and Stephen Harper among others. 

Then, at the end of the month, the final: a European Union summit where the continent’s decision makers face the prospect of ruin or rescue for their common currency.

Given the very narrow win by Greece’s pro-bailout parties on Sunday, Europe’s leaders will undoubtedly sigh with cautious relief that the politics of fear won out over the outburst of anger in that earlier election of May 6.

Then a collection of left-wing and far left-wing parties under the banner of SYRIZA rose from almost nowhere to second place shouting No to austerity and to European Union diktats. 

So fractured was the political landscape that no government could be formed. 

In this second election campaign the centre-right New Democracy leader Antonis Samaras kept his message simple and terrifying: "The drachma equals death," the drachma being the Greek currency before the Euro.

SYRIZA countered that European-imposed austerity seemed a death spiral in itself. In four years the economy has shrunk by 16 per cent, official unemployment is at almost 23 per cent. The country has ground to a halt with salaries slashed, pensions cut, shops closing, hospitals running short of supplies and suicides climbing.

But Sunday’s very narrow victory for New Democracy over SYRIZA carries with it a bonus for coming first — 50 extra seats in the 300-seat parliament.

With those seats Samaras’s New Democracy ought to be able to form a coalition with other parties wanting to stay in the euro while accepting the broad outlines of austerity.

But, make no mistake, the coalition will be weak and everyone in Greece wants easier terms.  Any sense that Europe has emerged from crisis is a mirage.

Keep passing the ball

In retrospect, 2004, Greece’s wonder year, was also a mirage. The Olympics were hailed as a triumph but the public palaces of sport hid secret swamps of debt.

The official budget was $8 billion for the Games but some experts put the real figure at five times that. No one knows for sure; successive governments never published the final total.

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New Democracy's Antonis Samaras probably has enough support for a pro-Europe coalition government. But how long will it last? (John Kolesidis ?Reuters)

That was the established Greek approach to public accounting: cook the books.

In fact, that is how the country got into the eurozone in the first place and that’s how it carried on for a decade, hiding vast deficits until, finally, in the fall of 2009, a newly-elected government realized the debt mountain could be hidden no longer.

The problem for Europe’s leaders, however, is that the fever is spreading. 

Spain is already sweating. It’s had to ask for $130 billion to bail out its banks and its government bonds have been reduced to one level above junk by the rating agency Moody’s.

The Spanish government acknowledges it may not have enough money to pay out pensions in July. It may need another bailout.

Cyprus, also in the EU, will soon call for a bailout for its banks. Italy is feeling the interest-rate squeeze on its bonds.

Meanwhile Europe’s leaders, like Europe’s soccer players, keeping passing the ball.

There is talk of eurobonds, of European deposit insurance, of direct recapitalization of struggling banks through the European Financial Stability Facility. It is all pretty arcane but the point is that, so far, it’s all just talk.

A house with no foundation

Meanwhile, in the fine English tradition of rowdy disdain for continental opponents, the British chancellor of the exchequer, George Osborne, jeers from the sidelines.

Britain stayed out of the euro — it didn’t want to play in the same economic league with those foreigners — but it is mired in its own recession, producing considerably below its potential (much like its soccer team).

But Osborne, the British finance minister, tells the Europeans that to dump Greece from the euro might be the only way to force fundamental reform in the currency area.

That suggestion might prove a little more difficult now that Greek voters have expressed their desire to try to stick with the program. But it certainly captures the view of many decision makers here that Europe’s currency union is far from being a sturdy structure with real foundations.

Since its beginnings in January 1999, the eurozone has expanded to include 17 countries, but it is effectively a currency union without any central political or budgetary controls. Think of it as a house with 17 rooms but no walls or floor.

But the Germans still like the roof. And they know they’d be the ones to pay for the walls and most of the floor if anyone wants to actually try to complete this structure.

When the new French president called for a European growth pact, to replace the austerity regimes imposed on Greece and others, German Chancellor Angela Merkel responded by taking a swipe at France, saying its growth was stalled and its wages and costs are climbing, and the new president should maybe do something about that first.

Then she said: "Germany is strong, Germany is the economic engine and Germany is the anchor of stability in Europe. But we also know, Germany's strength is not infinite." In other words, there would be no "miracle solutions" that would involve German money building a stronger house.

Germany – imperious, on the field and off. Greece still wobbling, and the game undecided.