With markets tanking all over the world as a result of the growing probability that Greece will be forced to leave the euro zone, Greek President Karolos Papoulias gave up on his efforts to get the major parties to form a government and issued a call for new elections to be held next month.

Reuters:

He did not immediately give the date for the new vote, but elections rules suggest it will be in mid June. A caretaker government would be formed on Wednesday, the spokesman said.

"For God's sake, let's move towards something better and not something worse," Socialist party leader Evangelos Venizelos told reporters after the meeting. "Our motherland can find its way, we will fight for it to find its way."

Greece remains without a government since its inconclusive election left parliament split between supporters and opponents of a 130 billion euro bailout package reviled by Greeks for imposing deep wage, pension and spending cuts.

Polls show the leftist SYRIZA party, which rejects the bailout and placed second in last week's vote, is now on course to win, a result that would give it an automatic bonus of 50 seats in the 300-seat parliament.

European leaders say that they will cut off funding for Greece if it rejects the bailout agreed in March, which would mean bankruptcy and all but certain exit from the European single currency.

Part of the uncertainty, as I mentioned yesterday, is when, how, and even if Greece will leave the euro. If the trioika fails to given them a 5 billion euro tranche as part of the bailout next month, the Greek government will be unable to pay its salaries and pensions, much less make an interest payment on its debt. But for that to happen, there would have to be a clear, unambiguous reason to withhold the cash. Such is not likely next month, as the results of the new election may be as inconclusive as this last round was.

Greece's exit is likely to be a slow motion train wreck rather than a bolt from the blue. That's not a good scenario for the markets as bank stocks in Europe are tumbling and bond yields are rising.