Don't be fooled by a rallying stock market, where blind hope that a dollar-deluging Federal Reserve will come to its rescue has trumped fundamental analysis these past two days. The world must come to terms with a brutal fact: the euro's endgame has begun.

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That was made clear by Monday's gloomy market response in euro-zone bond markets to what in theory was the best possible outcome from Greece's weekend election. With the narrow victory for the center-right New Democracy party and the prospect of a minority government that can push through an agenda that is more or less favorable to Greece's EU creditors, the beleaguered country got to fight another day. And yet there was nothing but disappointment in the euro zone following the news, as Spain's bond yields soared to new euro-era highs.

It was as if investors had gone into the weekend hedged for the slim possibility of a miracle. Perhaps they were holding out for an all-out majority victory for New Democracy and for some confidence-building statements of intent from both the new government and the EU that a revised rescue deal could be drafted to remove the threat of a Greek exit from the euro zone. Once that miracle didn't happen, they unwound their hedges and reflected on what is by now the consensus view: that, no matter who is in charge, Greece will have to dump the euro at some point.

In effect, a Greek exit has become a foregone conclusion for many, and that makes its problems yesterday's story. Now it is all about Spain, an economy that is almost twice the combined size of Greece, Ireland and Portugal, the three euro-zone countries that have already received bailouts.

Spain has already been pledged up to EUR100 billion from its EU partners to fix its banks. Translated into dollars and adjusted for the proportional size of America's GDP, which is 12 times that of Spain's, the equivalent figure would be $1.27 trillion in the U.S., or $577 billion more than Congress authorized for the TARP bailout of U.S. banks in 2008.

So it is deeply disturbing that the fear du jour is that EUR100 billion won't be enough. Between them, Spanish banks have a staggering EUR3 trillion in assets on their books, or about three times the size of the country's GDP. Many of the doubtful debts among those will still need to be written down, the process of marking to market has been delayed by both poor accounting and a highly illiquid real-estate market, where otherwise depressed properties are withheld from the market because of inheritance rules that make it hard for families to sell. Sean Egan, president of the Egan-Jones ratings agency, which recently slashed Spain's debt rating to CCC+, seven notches into "junk" territory, believes the banking system may need up to EUR300 billion in fresh capital on top of the EUR100 billion that the EU has already pledged.

Such giant sums will only deplete the already limited EU bailout fund. What's more, by taking Spain out of the club of contributing countries, the burden of sustaining the pool will proportionately rise on those that are left--including a similarly debt-laden Italy and a Germany whose citizens are steadfastly refusing to provide anymore backstops to their bankrupt euro-zone partners.

It's hard not to conclude, in other words, that the euro is doomed. Not only is Greece's exit seemingly assured, but Spain looks poised to become a dangerous domino from which contagion will spread to the rest of the euro zone.

Here's the catch: This won't happen overnight. With the failure of the radical left Syriza party in Greece's election to garner enough votes with which to govern, there is still no government in the euro zone that openly wants to end the status quo by which all member states have made an explicit commitment to fiscal austerity and the integrity of the monetary union. Only under extreme duress will the euro actually break apart.

So while the market consensus views a blowup as inevitable, the time frame could still be quite long. That suggests that the current global market malaise will persist for some time. There might not be a mass, one-off exodus from the euro and other risky currencies as there was after the Lehman collapse in 2008, but there could be a constant, gradual outflow into dollars and other safe havens, a pattern that is hardly conducive to making money.

This is going to be a long, painful process.

—Michael Casey is managing editor for the Americas at DJ FX Trader, a foreign-exchange news service jointly produced by Dow Jones Newswires and The Wall Street Journal. He is the author of "The Unfair Trade: How Our Broken Global Financial System Destroys the Middle Class." He can be reached at michael.j.casey@dowjones.com.