11. As long as a Member State fails to comply with a decision taken in accordance with paragraph 9, the Council may decide to apply or, as the case may be, intensify one or more of the following measures:

to require the Member State concerned to publish additional information, to be specified by the Council, before issuing bonds and securities,

to invite the European Investment Bank to reconsider its lending policy towards the Member State concerned,

to require the Member State concerned to make a non-interest-bearing deposit of an appropriate size with the Union until the excessive deficit has, in the view of the Council, been corrected,

to impose fines of an appropriate size.

The President of the Council shall inform the European Parliament of the decisions taken.

12. The Council shall abrogate some or all of its decisions or recommendations referred to in paragraphs 6 to 9 and 11 to the extent that the excessive deficit in the Member State concerned has, in the view of the Council, been corrected. If the Council has previously made public recommendations, it shall, as soon as the decision under paragraph 8 has been abrogated, make a public statement that an excessive deficit in the Member State concerned no longer exists.

13. When taking the decisions or recommendations referred to in paragraphs 8, 9, 11 and 12, the Council shall act on a recommendation from the Commission. When the Council adopts the measures referred to in paragraphs 6 to 9, 11 and 12, it shall act without taking into account the vote of the member of the Council representing the Member State concerned. A qualified majority of the other members of the Council shall be defined in accordance with Article 238(3)(a).

Eoin Treacy's view A number of pundits have also cited Article 122 as a key clause which allows for aid to be given to a state following a natural disaster beyond its control. However there is considerable conjecture as to whether a manmade financial crisis qualifies.

I believe these two sections are useful in defining the context through which a country such as Greece can be regulated and/or aided by the various arms of the European Union. Article 122 probably has enough leeway so that if a country is in real financial difficulties some form of aid package can be arranged. Article 126 is quite clear in defining the actions which can be taken if a country is running deficits beyond the Stability and Growth Pact's parameters. Of course since no country is currently within those parameters, investors have focused on the largest transgressors, i.e. Greece, Portugal, Ireland, Spain and Italy. (Also See Comment of the Day on January 29th)

Credibility is at the heart of this crisis. If a country is seen to be acting in good faith by the European Commission, by implementing the agreed deficit reducing measures and supplying accurate, timely progress reports, then the likelihood of an additional aid package being arranged if it is deemed necessary will be considerably improved. However, the uncertainty lies in whether politicians can sell the spending cuts, tax hikes and pay reductions to populations that feel they are not personally responsible for this crisis and question why they are paying for the mistakes of a relatively privileged minority. Eurozone politicians have a tough job ahead of them in making citizens aware of just how deep the problems are. If the Eurozone is to remain intact, they will need to succeed.

Here is a section from an article by BusinessWeek by Meera Louis quoting EU Economic and Monetary Affairs Commissioner Joaquin Almunia:

"I am fully convinced that the EU and the Economic and Monetary Union have instruments enough to cope with this challenge," EU Economic and Monetary Affairs Commissioner Joaquin Almunia told a press conference today in Brussels when asked if the IMF should step in to assist the Greek government in shoring up its finances. "It is what we are doing."

The IMF requires that a country seeking an aid package sign up to a range of fiscal regulations that need to be followed if they the money is to be released. Article 126 and others in the Lisbon Treaty seem to imply that the European Commission is capable of exacting the same concessions from a Eurozone member country in the event of a major transgression. Perhaps Ireland offers an example of where this type of activity has already occurred.

Given the current uncertainty relating to the Eurozone, CDS spreads have increased for just about all members. However, Greece, Portugal and Spain are all pushing significantly higher in an indication of which countries investors are betting the greatest problems lie. These countries (Greece, Portugal, Spain) have also experienced the most aggressive stock market selling pressure over the last three weeks. Upward dynamics are required to check momentum beyond a brief pause and indicate shorts are being pressured and demand returning.

Elsewhere in Europe, Scandinavian markets continue to show relative strength while the Euro Stoxx 600 continues to fall toward its 200-day moving average. However, these markets also require upward dynamics to suggest demand is returning and to limit potential for further tests of underlying trading.