A high vertical resolution model is used to examine the instability of a baroclinic zonal flow and a finite amplitude topographically forced wave. Two families of unstable modes are found, consisting of zonally propagating most unstable modes, and stationary unstable modes. The former have time scale and spatial structure similar to baroclinic synoptic disturbances, but are localized in space due to interaction with the zonally asymmetric forcing. These modes transport heat efficiently in both the zonal and meridional directions. The second family of stationary unstable modes has characteristics of modes of low frequency variability of the atmosphere. They have time scales of 10 days and longer, and are of planetary scale with an equivalent barotropic vertical structure. The horizontal structure resembles blocking flows. They are maintained by available potential energy of the basic wave, and have large zonal heat fluxes. The results for both families of modes are interpreted in terms of an interaction between forcing and baroclinic instability to create favoured regions for eddy development. Applications to baroclinic planetary waves are also considered.