GREECE is really a small, barely significant country with a population of 11 million and makes up about one-and-a-half percent of the total annual European Union (EU) economic activity. In 2010 Greece was the EU’s largest producer of cotton and pistachio nuts. This is not a country that you would normally expect to be constantly on the front pages of the global newspapers.
Perhaps, though, it is appropriate that a small country like Greece would be at the forefront of the “Big Bang” that is going to hit the global economy and markets at the end of this quarter.
The idea that “If you take care of the small things, the big things will take care of themselves” applies here. Since the 13th century, there has been a reoccurring message about a king and a horseshoe nail. “For want of a nail the shoe was lost; For want of a shoe the horse was lost; For want of a horse the battle was lost; For the failure of battle the kingdom was lost.”
The debt default by and the subsequent decision of Greece to abandon the lending requirements of the EU may be the lost shoe nail that leads to the destruction—or at least major change—of the EU. However, in the larger picture, it is apparent that this event may be the first step as we march to what Martin Armstrong calls the “Big Bang” at the end of September.
The cycle of change between confidence in the private sector and confidence in the public sector—government—is about to switch. This change is going to create political and social upheaval as politicians, governments, and their corporate sponsors lose the people they both serve and exploit.
The Greek voters telling their government that they will no longer be subject to economic control of the EU has been spun many ways. “Greece has learned there is no free lunch.” “They deserve what they got.” “This is what happens when you repeatedly elect a socialist government.” That all may or may not be true, but it misses the more important bigger picture.
Greece joined the EU in 1981, and adopted the euro currency in 2001. The people were promised by their politicians that this would lead to increased prosperity. The EU accepted Greece even if any accountant with half a brain knew that Greece was faking its fiscal and economic numbers to qualify for membership and to be part of the euro-currency mechanism. Since that time, the Greek government has only been a proxy for the real rulers of Greece; the EU, the European Central Bank and the International Monetary Fund. But the Greeks had continuing confidence in “government.” That all changed this past Sunday. The Greek voters overwhelmingly voted their lack of confidence.
China is facing the same problem. The people have gone along with all the Chinese government’s promise of more prosperity. They bought real estate when they were told to do so, even while there was an obvious oversupply. They bought the stock market when the government told them to, even as the entire system was rigged for stock-price increases based only on government manipulation.
Now with the Shanghai stock-market crashing, investors are panicking. The Chinese government has resorted to extraordinary intervention and manipulation to stop the fall. But, at some point, the Chinese people are one way or another going to “vote” their lack of confidence in their government.
The press, media and government leaders in the US, led by Wall Street financial institutions and the banks, have taken dishonest and false economic propaganda to a level that would make North Korea’s Kim Jong Un blush in embarrassment and scowl with envy.
Eighty-two percent of the total US government debt has been created since 2009 and is responsible for virtually all economic growth. The Wall Street Journal reports “The strongest stretch of job creation in two decades” while failing to mention that most of the jobs are in the lower paying “leisure and hospitality sector.” There are more bartenders and waiters in the US than employed in manufacturing, the first time in history. An industrial-relations professor at Clark University in Massachusetts said, “Manufacturing workers have become hamburger flippers.”
Greece is only the first nation whose citizens have made the confidence cycle change. The “Big Bang” has only just begun.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter
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