As a lightening rod for the global capital markets, Greece has surrendered. It role being taken up by China rough transition or the Fed's continued reluctance to hike rates six years since the recession ended and despite the achieving of unemployment levels rarely seen.  

However, the Greek project is far from complete. Greece still has to approve and implement far-ranging reforms, and commit to new austerity measures in order to free up funds and recapitalize the banks. Every time Prime Minister Tspiras submits a new reform bill, the political fabric frays.  

Over the weekend, Tsipras tightened his control by facilitating the election of three cabinet ministers to the leadership committee of Syriza.  This strengthened his hand to submit the latest package of reforms to parliament late yesterday. A member of parliament from the junior coalition partner immediate threatened to abstain. The leader of center-right New Democracy balked, claiming his party would not vote for “recessionary measures.”

The package of reforms are part of the “prior actions” agreed upon with the EU and IMF and are required for the disbursement of another 2 bln euros of aid. Many of the measures had been rejected or diluted by Syriza or prior governments. They include scrapping concessions that were previously made for special groups. Among the most onerous actions is the 10% cut in pensions for retired Greeks who have not reached the new statutory retirement age of 67. It also eliminates a small basic payment to retirees without pensions.  In addition to increasing the tax rate for rented properties, property owners are responsible for tax on rents owed but not collected. 

This process will be repeated next month with additional reforms and taxes. In the first round, farmers will lose their fuel subsidies. Next month's package will close the loophole that has taxed farm income at half the standard rate. Not only will the current tax rate double, but it must be paid in advance.