 TWO things jump out regarding the latest EU attempt to bail out Greece. First, it has taken nearly 18 months of dithering for Europe's leaders to agree on the only solution to the crisis recognised by the financial markets, namely a bond swap in which Greece's creditors roll over their loans in return for paper guaranteed by the eurozone authorities.  The full details of the swap are unclear - and could still unravel. However, Europe's banks seem willing to play ball. Technically, this deal will trigger a formal default notice by the global credit agencies (Fitch has already signalled it will declare a "temporary" default status). But the extent of credit default swaps outstanding on Greek sovereign seems mercifully small, so there shouldn't be a Lehman Brothers-esque catastrophe.  The other big development contained in the package is the elevation of the European Financial Stability Facility (EFSF), the limited bailout mechanism invented in May 2010 in the first attempt to prevent a Greek default. according to French president Nicolas Sarkozy, the EFSF will be transformed into a veritable "European Monetary Fund", along the lines of the International Monetary Fund. Given that France traditionally always gets to appoint the head of the IMF, and given that the IMF's previous boss (the tainted Dominique Strauss-Khan) lined up the organisation to support earlier eurozone bailouts, why all the fuss?  The answer is that the root cause of the eurozone sovereign debt crisis lies in the lack of a mechanism to enforce fiscal discipline on members of the monetary union. The reason Germany and the European Central Bank seem to have relented on their earlier resistance to a bond swap (aka technical default) is they see a beefed-up EFSF as the first step in imposing EU-wide control over the lax borrowing and spending of member states. But will it work?  I have doubts. ask yourself: why did the markets lend to Greece in the first place? Because they assumed the EU would always rescue its members to preserve the euro. The creation of a European Monetary Fund might actually reinforce this moral hazard unless it is given genuine powers to sanction recalcitrant member governments. But how long will that take to agree? Plus, any shift to a eurozone fiscal policy wil 