Your Guide To All The Countries That Are One Riot Away From Becoming Greece

5/5 greece riot

Photo: PIAZZA del POPOLO

Yesterday’s violent riots were a reminder that many Greeks are strongly in favour of default.Investors have begun to question the financial strength of other European nations, even those outside of the infamous PIGS group (Portugal, Italy, Greece, Spain).

Here’s a snapshot taken from a Morgan Stanley report by Paolo Batori that shows how European financial systems have deteriorated during this crisis, and who’s most at risk of becoming the next Greece.

If you start to see international funding dry up for any nation, watch out…

Italy's problems appear somewhat contained given that it hasn't been deteriorating as rapidly as many other major European nations -- even though Italy still has substantial debt.

Source: Morgan Stanley

Italy also hasn't deteriorated nearly as fast as other PIGS nations.

Source: Morgan Stanley

Risk premiums between short and long dated Portuguese bonds have changed substantially, indicating concerns about Portugal's long-term debt sustainability.

Source: Morgan Stanley

Something similar has happened for Spain...

Source: Morgan Stanley

And Italy, even though this nation seems to be the best off of the PIGS.

Source: Morgan Stanley

Could the crisis spread to Central and Eastern Europe?

Source: Morgan Stanley

Well, only Hungary (HU) has a worrisome debt to GDP level on par with Italy (IT), Greece (GR), and Portugal (PT). This luckily hasn't been deteriorating for Hungary recently, unlike the PIGS.

Source: Morgan Stanley

Many central and eastern European nations also have smaller current account deficits. Look how horrible Greece is on this front.

Source: Morgan Stanley

Portugal and Spain stand right alongside Greece in terms of having massive amounts of external debt. That's one big reason they have serious challenges. Central/Eastern Europe generally looks OK here.

Source: Morgan Stanley

Portugal, Greece, and Spain look the ugliest in terms of private credit too.

Source: Morgan Stanley

Still, Central and Eastern Europe are at risk of contagion despite their better standing.

Source: Morgan Stanley

Here are some non-PIGS nations exposed to a collapsing Greek financial system.

Source: Morgan Stanley

What to watch out for: If international funding starts drying up for nations outside of the PIGS, then there's contagion.

Source: Morgan Stanley

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