Background: The two main traditional parties in Greece are the conservative New Democracy (ND) and the socialist PASOK, both steeped in Greece's long-standing culture of corruption and both more or less submissive to the EU's imposition of austerity policies which are wrecking Greece's economy and society. An upstart far-left party, Syriza, wants to reject austerity, claiming that the EU is bluffing about cutting off Greece's bail-out loans if it does so.
A Syriza win would have had one of two results: (1) Greece abandons austerity, the EU cuts off the bail-outs, Greece defaults and abandons the euro currency for the drachma, confidence in the euro collapses and the euro-zone breaks up. (2) Greece abandons austerity, the EU caves out of fear of the consequences of Greece abandoning the euro and continues the bail-outs, other countries in similar straits (Spain, Italy), abandon austerity having seen Greece get away with it, austerity policies are abandoned across Europe.
Either scenario would have put Europe on the road to recovery. Austerity has locked Europe's weaker economies in a death spiral, driving up unemployment, wrecking welfare states, and worsening the debt / deficit problems they are supposedly meant to solve. The euro currency prevents those same economies from restoring international competitiveness via devaluation. Abandoning either would help; abandoning both would be best.
[Background on Europe's problems here, more here.]
But it was not to be. ND got 29.7% of the vote, edging out Syriza with 26.9%, while PASOK came in third with 12.3%. If a fraction of PASOK voters had opted for Syriza, the latter would have won. But the EU's threats, and fear of having to abandon the euro (this would actually benefit Greece in the long run, but most Greeks either don't realize this or fear the leap into the unknown), apparently proved too much for some voters.
Challenges remain. ND cannot form a government unless it forms a coalition with PASOK or with some combination of even smaller parties; PASOK says it won't join a coalition unless Syriza too is included. But the most likely outcome is an ND-led government of some sort, submissive to the EU's will; austerity will continue its ruinous course, the economy will continue to shrink, jobs and the middle class will continue to be destroyed, and the best people will continue to emigrate.
Things can't go on like that forever, of course. Even ND wants some alleviation of the austerity policies (it won't be easy for a party that won less than 30% of the vote to press on with policies hated by most of the public), and continuing with them may simply be impossible. Staying the course will ultimately lead to total collapse and / or violence, anarchy, and perhaps a military coup to restore order. With Spain, Italy, and the new French government now favoring growth policies over austerity, it's possible that the EU itself could change, especially if next year's election in Germany replaces Merkel's conservatives with a socialist government, as seems likely. But for now, the architects of Europe's ruin remain firmly in the saddle.
For more background, see Paul Krugman's debunking of popular myths about Greece, and a couple of videos with Britain's straight-talking Nigel Farage from earlier this year -- here addressing a Greek youth group:
and here interviewed on Russia TV:
More from Farage here.