Greece Crisis Is Getting Worse

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- The eurozone situation was bad enough six months ago. It is getting worse.

None of the key players are addressing the fundamental problem the eurozone is facing: the weak sisters (Greece, Italy, Portugal and Spain) are not now and will never be competitive with Germany, et al. This problem will not be resolved until either the weak sisters or Germany, et al. leave the eurozone and issue their own currencies.

Instead of facing up to this reality, here is what the key players are doing/saying:

The International Monetary Fund

The IMF staff developed an elaborate austerity plan for Greece described in an earlier piece. The plan was intended to make Greece competitive with Germany, et al.

There were two problems with the plan. First, the austerity plan was so extreme that initial efforts to implement it made things worse (shrinking government revenues/no reduction in the deficit). Second. the plan was politically impossible to implement; instead, governments fell and there were riots in the streets.

To its credit, the IMF saw what was happening and gave up on it. This caused a serious rift between the IMF and Germany. What has been the IMF's response? Nothing from the staff, but Ms. Lagarde has called on Europe to create a much larger "buffer/rainy day" fund. This is, of course, more of a "put-your-head-in-the-sand" approach than any effort to resolve the problem.

European Central Bank

The ECB has been a problem from the outset. Instead of serving as a central bank/lender of last resort, it has been more concerned about purchasing assets that will lose value (sovereign debt of the weak sisters) than being a lender of last resort. Recently, given the enormity of the crisis, it has been forced to purchase increasing amounts of sovereign debt. But it continues to worry about the value of the assets it is holding and has resisted taking a "haircut" on its holdings of Greek debt.