For almost five years, the Europeans tied their fate to the development of a small country on the southeastern edge of the continent. But the struggle over whether Greece – a country that represents less than 2 percent of the euro zone’s economic output – should remain in the monetary union attracted attention far beyond Europe’s borders.
The grotesque nature of this one-sided perception, this loss of a sense of reality, has become apparent in recent days. With the sharp declines in global stock markets, we are suddenly realizing that the true threats to the world economy are to be found elsewhere. Wherever one looks today, there are potential risks that make the events in Greece appear miniscule by comparison.
China, the measure of all things when it came to growth in the last few decades, is exhibiting astonishing symptoms of crisis. Other emerging markets, such as Brazil, Russia and India, are also faltering. Capital flight from the emerging market has already begun, as evidenced by declines in the value of their currencies of 10 percent or more.
And with the exception of the United States and Germany, the economies of the major industrialized countries are growing at little more than a snail’s pace.
It is this combination of factors that is suddenly sending the markets into panic mode again, after an unusually long upturn. The hour of the crash prophets has arrived. The German DAX stock index, back down in four-figure territory since Monday, has lost more than €200 billion ($231 billion) in market value in the last two weeks alone.