Morgan Stanley analyst Daniele Antonucci and his team produced a fascinating note to investors about unrest in Europe this morning, which included these charts which rank countries by the likelihood that they will follow Greece over the brink into an outright Syriza-style revolt against the EU and austerity. The note is timely given recent comments by German chancellor Angela Merkel and European Council president Donald Tusk, who both said last week they were worried about the chance of violence and “revolution” if Greece doesn’t fall into line.
Perhaps unsurprisingly, the rise of Podemos in Spain is Morgan Stanley’s biggest risk. Podemos is a leftist party founded only last year, but it is already the second biggest political party in Spain. Antonucci writes:
Spain (parliament) — late November or December: This is possibly the most crucial political election in 2015, at least for the eurozone countries. The events in Greece may perhaps discourage those thinking to support Podemos and other protest parties. Yet, the polls suggest that the challengers are likely to fare very well.
This chart shows the recent track record of anti-EU parties in their home countries. Note that their support is generally growing:
And this one (below) ranks the increase in popularity of each rebellious party against that country’s “misery index.” (The misery index, created by economist Arthur Okun, is an estimate of how bad it is to live in a given country, and it is calculated by adding the unemployment rate to the inflation rate. The result is the assumption that if you live in a country with high unemployment and high inflation, you’re probably pretty unhappy.)
The good news is that Greece’s misery index is an outlier, and no other country is in a similar position. But Spain — Podemos again! — is the next worst country to Greece in this ranking:
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