If Greece has not cut excessive deficits by February, the EU will consider stepping up disciplinary action.
If past (in)action is any indication, a harshly worded letter or a lousy seat at the next EU summit may be unleashed against the recalcitrant Greeks. Perhaps even a stinging rebuke!
The market has the ability to punish Greece far more than the EU. So far it has sent a warning via the bond markets. At present, Greek government debt trades at a 175 bp spread over benchmark German debt in the 10-year maturity. They were wider late last week when the Dubai situation broke into the open.
In EU news, Juncker says he will run for a fresh 2.5 year term as head of the Eurogroup come January.
