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If rising stocks in the U.S. are a "wealth effect," then I guess we can call the Cypriot stock market's 98% collapse a "poverty effect," right? Unfortunately, they're not the only market that has been slammed in recent years thanks to involvement in the single-currency system.

Here's the sad reality of the peripheral poverty effect:

  • The Spanish stock market is 50% off its 2007 highs and hasn't budged since joining the euro.
  • The Italian stock market is down 60%+ since its 2007 highs and is negative since joining the euro.
  • The Portuguese stock market is down over 60% since its 2007 highs and is flat since joining the euro.
  • The Greek stock market is down over 80% since its 2007 highs and is negative since joining the euro.
  • The Cypriot stock market is down 98% from its 2007 highs.

(click to enlarge)

Source: Cypriot Stock Market via Macquarie Private Wealth.

Source: Visualizing The Euro Area's 'Poverty Effect'