A new report from the International Monetary Fund has turned attention, at least temporarily, from Greece to the larger potential problem of Spain, where unemployment is roughly 20 percent. A nice (if unsettling) summary:

Spain’s economy needs far-reaching and comprehensive reforms. The challenges are severe: a dysfunctional labor market, the deflating property bubble, a large fiscal deficit, heavy private sector and external indebtedness, anemic productivity growth, weak competitiveness, and a banking sector with pockets of weakness. Ambitious fiscal consolidation is underway, recently reinforced and front-loaded. This needs to be complemented with growth-enhancing structural reforms, building on the progress made on product markets and the housing sector, especially overhauling the labor market. A bold pension reform, along the lines proposed by the government, should be quickly adopted. Consolidation and reform of the banking system needs to be accelerated. Such a comprehensive strategy would be helped by broad political and social support, and time is of the essence.

The report, along with the government takeover of a faltering savings bank, seemed to get investors worried, even though neither was all that much of a surprise. Nonetheless, the cost of insuring Spanish debt rose, albeit to levels still far below that of Greece.

On the other hand, Spain was able to sell three- to six-month T-bills today, attracting bids worth more than twice the total offering. But the interest rate was a lot higher than in April. And last week a sale of 12 to 18 month T-bills fizzled.