Daily Lessons from Life 14 March 2012 - Eurozone approves nearly 40 billion euros in Greek bailout cash

"Mar 14, 2012 AFP - Eurozone approves nearly 40 billion euros in Greek bailout cash

BRUSSELS - The eurozone approved Wednesday the first wave of loans for Greece under a heavily-conditioned second bailout, Luxembourg Prime Minister Jean-Claude Juncker said.

"Euro area member states have today formally approved the second adjustment programme for Greece," the head of the Eurogroup of eurozone finance ministers said in a statement.

He specified that a "first installment" of 39.4 billion euros (S$65 billion) would be "disbursed in several tranches."

"All required national and parliamentary procedures have been finalised," Juncker said.

Describing the financial aid as "a unique opportunity for Greece that should not be missed," Juncker stressed that a "strong commitment" from Athens to "fiscal consolidation, structural reforms and privatisation" was required to return the Greek economy "to a sustainable path, which is in the interest of everyone."

The first wave of loans is to come from the European Financial Stability Facility (EFSF), the eurozone bailout fund due to be swallowed up by a larger permanent fund that should enter service at the beginning of July.

A spokesman for the EFSF said the money would cover two areas.

One is the recapitalisation needs of Greek banks after losses sustained during a write-down of privately-held Greek government debt.

This is now thought to be of the order of 25 billion euros - slightly more than initially estimated.

The remainder of the loans would cover Greek government financing needs through the end of June, the spokesman added."

Well, despite my training as a Chartered and Certified Accountants, I do not understand these finance stuffs created innovatively by the many eminent, smart and supposedly well meaning economists, bankers, central bankers, and policies makers, etc.

It never fails to trigger the question in my mind: did we not just do the same thing before? and whatever happened to the earlier money given? and will this batch goes the same way?

Lessons for me are:

1. if money given out in this manner is NOT tracked and NOBODY is held accountable, it will find its way to someone who are looking for a better yield elsewhere! i.e. money used in the not intended areas! This is especially so if the money flows to the so-called emerging economies in property and commodity speculation or bets;

2. will the fundamental mindset change takes place. i.e. we can no longer afford to spend on future income. Instead we must save some to pay off the interest expenses and debt principals that we owed others, even after the so-called hair-cut taken by our lenders!;

3. will we keep the discipline and make it a way of life instead of just flavour of the month with the 'consume responsibly and save prudently'? can we eat a dish less or smaller dishes each meal? can we stop smoking and drinking so that we can save our health and some real hard cash? For the Greeks, they will have to battle the established cynicism that they have to learn to pay some legitimate taxes!! All actions that will bring some pains to people's old way.

May this bailout be different from the last few - at least that is the hope I have to have!