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Countries at risk of bankruptcy: Argentina, South America

Posted by Adrian on October 22, 2008

As emerging economies come under increasing strain, particularly from tighter credit conditions and risk aversion; namely on currency exchange. High inflation has been an extreme problem for emerging economies. The one country or region that has been followed extensively on morbius glass (in regards to inflation and over valued stocks) has been Argentina and the South American economy.

Argentina already with a track record of defaulting on it’s loans is about to do it again. The Argentine president Cristina Fernandez de Kirchner recently requested that the Argentinian pension funds now come under government control, you don’t need to be an market analyst to know that the proposal is to pay off government debt. This is acknowledged through out the market and now looks certain that Argentina will be the first South American country to go bankrupt.

The current play down on Argentina’s looming default is it will be contained default (in other words the market has factored this in, bonds, stocks etc), we have heard that before haven’t we? Say the credit crisis, the words ‘contained’, ‘de-coupling’ and other phrases that simplified global connected markets and their perilous influence on each other. Synchronised booms are now being followed with a bust. South American economies could go into free fall on the extent of a rapidly slowing Chinese economy. With emerging markets showing weakness, to the point of going bankrupt. This would be a clearer indication that the broader global economy is in a lot of trouble.

Please refer to previous posts following Argentina and the South American economy:

Posted: Jan 8th 2008

Australia entering into hyperinflation? (update1) – America’s recession, Australia and South America’s China bet.

Posted: Jan 22nd 2008

All global stock markets decline, reinforced by the global Liquidity and Credit crisis.

Posted: Feb 13th 2008

Inflation – Asia, Southern Hemisphere

Posted:March 6th 2008

Argentina, Brazil high inflation, energy issues could lead to sharp decline on Stockmarket

Posted:

12th June 2008 Market conditions return to extreme volatility

Posted: October 9th 2008

Brace for a global recession (update 1) – ‘you can’t talk or buy your self outta this one’ (re governments and central banks). Commodity producing countries will take big hit’s.

Of course the share price of a country is it’s currency, this will be followed closely on morbius glass:

The Argentine Perso Cross rates against the US dollar:

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