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Don't Look Now: Greece Is Still in Trouble

Greece hasn't been making too many headlines lately amid the broader EU struggles, but the country is still on the brink.

The market was very skeptical this past week of the deal to create a fiscal union among eurozone members hatched at the previous week's EU summit. And rightfully so. Creating a new fiscal union outside of the EU framework isn't going to happen overnight. There are a huge number of political and technical obstacles that are going to pop up during the course of 2012 and many opportunities for the deal to be derailed. However, behind the chatter about the new fiscal union was another European story that might have as big of an impact on the final outcome of the crisis: Greece is falling short in its reform efforts and remains a threat to European stability.

Of course, given Greece's short- and long-term track records, it shouldn't be a huge shock that the country is falling behind, but the International Monetary Fund report released this week highlights the gap between the official line on reform and what is actually happening on the ground. The IMF sees a number of problems in Greece. Among them, the economy has taken a turn for the worse and the recessionary woes continue to escalate. Authorities are having trouble implementing the austerity measures that they have already passed, and privatization plans have been sidelined as market conditions are making it almost impossible to divest of anything even at fire-sale prices. The IMF believes that the new government is committed to following the plan, but so far it isn't working.