With the probable election of the first socialist president in France in more than 15 years, and bond rates rising in Spain and Italy, investors appear to be questioning the committment of the euro zone to tackling budget deficits and the sovereign debt crisis.

Markets were shaken after a first round of French presidential elections on Sunday put Socialist Francois Hollande, who wants the euro zone to focus on growth rather than austerity, ahead of incumbent Nicolas Sarkozy. The two contenders face off in a final vote May 6.

Further undermining stability, the Netherlands' government collapsed yesterday after failing to reach agreement over austerity measures, placing its AAA credit rating at risk. But Spain still managed to lure strong interest in the auction with overall demand outstripping supply by more than four-to-one.

The money raised was towards the top of its targeted range of €1-2 billion. But it had to pay a steep price. The borrowing rate leapt to 0.634% from 0.381% for three-month bills and to 1.58% from 0.836% for six month bills, when compared with the last similar auction on March 27.

Spain has promised to cut its public deficit - the annual shortfall of income compared to spending - to 5.3% of gross domestic product in 2012 and just 3% of GDP in 2013. Last year it had allowed the deficit to hit 8.5% of GDP - 2.5 percentage points over target.

Desperate to meet its targets, the government approved €27 billion in fiscal tightening in its 2012 budget, in addition to an earlier round of tax increases and spending cuts amounting to €15.2 billion.

But analysts say those targets will be harder to reach as tax income declines and welfare costs rise because Spain is back in recession just two years after emerging from the last downturn. Spanish GDP fell by an estimated 0.4% in the first quarter of 2012 after a 0.3% decline in the last three months of 2011, the Bank of Spain said yesterday.

Social unrest in Greece and Spain are rocking the governments of those two countries. Greece has seen its economy contract an astonishing 5% and along with austerity measures, will cause enormous pain among the citizenry. An election next month is not likely to solve anything, as the major parties are all committed to drastically cutting the budget in order to keep receiving the EU bail out package to prevent default. If anything, some of the fringe parties on the right and left may make sizable gains as they promise a way out of the crisis without the accompanying sacrifices being asked by the current government.

Recession has complicated the Spanish situation enormously. There is little chance they will meet those deficit targets - or even come close - while the economy is contracting. The demonstrations in Spain have been massive and a general strike last month paralyzed many sectors of the economy. Spanish prime minister Mariano Rajoy has pledged to continue the austerity program - referred to as the "harshest budget ever seen in Europe - but has very little room to maneuver. Unemployment is expected to climb to depression-era levels of 25%.

All of this has led some analysts to wonder if by this time next year, the austerity budgets in most of the eurozone will be history. It is possible that governments may fall, unrest roil the streets, and some countries default rather than inflict pain on their citizens - the result of decades of overspending and over promising. What becomes of the european experiment if this happens, no one knows.

But it is very possible that the face of Europe will change dramatically and the ancient concept of a United States of Europe end in a sea of red ink.