Despite an announcement of a massive bailout, the future of the Greek economy- and by extension the entire euro zone as well- is now more at risk than ever.

Several months ago, bond vigilantes swept into the Greek bond market, giving rise to market volatility and whispers of a Greek default; the Euro Financial Crisis was born. Since then, events have only served to deepen the severity of economic gloom, whether in the form of reports of Greek guile in reporting budget numbers, political marches and riots in Athens, or the somewhat slow and divided response from the IMF and EU heavyweights over how to avoid a much-dreaded default.

Now it has come to light that the IMF and EU will be extending a bailout to the Greek government to the tune of around 110 billion euros. It is safe to assume that these funds will be lent at around 5% interest- far lower than the towering rates that the Greek government is presently forced to pay on the open market. The bailout will also have some substantial strings attached to it in the form of a package of austerity measures that the Greek government must implement. The package is reportedly aiming to cut the Greek deficit by 10 percent before the end of 2011- a quixotic goal if there ever was one.

It’s important to note that the 110 billion euro lifeline that is being thrown to the Greek government is merely enough to keep over the default line through 2011.  The funds will cover the Greek budget shortfall and pay off maturing debts, but little else. There is no guarantee that a liquidity injection to avoid default won’t become a bi-annual affair given the fact that the Greek economy’s struggles are far from over.

Even the most optimistic economist would have a hard time imagining that the Greek government will be able to slash its budget deficit by 10 percent in a mere two years.  The Greek economy is still reeling from the 2008 global financial crisis, and the sudden, wholesale reigning-in of public spending that austerity packages call for will only serve to deepen recession. A shrinking economy, declining public revenue, and the absence of the levers that a monetary policy affords a government- all of these factors point to political instability and a deepening fiscal crisis moving forward.