First Venezuela, now Argentina, and Brazil is next. Leftist are collapsing some of the once most vibrant and resource rich economies of South America. All three of these countries were prospering and doing great under capitalism and all three have tremendous natural resources and all three are headed down the tubes. This could get real ugly and drag the entire world economy back into a recession. This could trigger the next black swan event if Argentina defaults, again, and drags Brazil down with it. http://www.theguardian.com/world/2014/jan/24/argentinian-peso-freefall-economic-crisis-deepens The peso is suffering its fastest fall since Argentina's 2002 economic collapse as dwindling reserves keep the central bank from trying to prop up the currency by intervening in the foreign exchange market. The 16 percent loss in the peso's official value against the dollar over Wednesday and Thursday could worsen the country's inflation, which is among the worst in Latin America, analysts said. The peso fell from 6.88 per dollar on Tuesday to 7.14 on Wednesday. By Thursday's close, it was at 8 to the dollar. On the black market, where Argentina's currency is even weaker, the peso dropped 6 percent Thursday to 13 per dollar. The sharp depreciation is likely due to a new government strategy of seeking a sudden devaluation instead of a gradual one, said Juan Pablo Ronderos of economic consulting firm abeceb.com. "There was a first sign of this change on Tuesday because the central bank didn't show up (to intervene) until midday, and on Wednesday and today it just disappeared from the market," Ronderos said. "The gradual devaluation wasn't working because the central bank kept on sacrificing lots of its reserves and it kept on being reflected on consumer prices." Analysts expect Argentina's inflation to reach more than 30 percent this year, the second highest rate in Latin America after Venezuela. "The sharp drop will aggravate inflation, although the impact may be mitigated by the fact that some imports will already be purchased at the much weaker black market exchange rate," Neil Shearing, chief emerging market economist at Capital Economics in London, said in a research note. "The bigger picture, though, is that the economic mismanagement of the past decade has once again pushed the country to the brink of a balance of payments crisis," Shearing wrote. Critics of the left-leaning government of President Cristina Kirchner blame economic problems on its higher spending on social programs, expansion of business regulation and nationalisation of some companies. http://www.theguardian.com/business...na-peso-new-crisis-emerging-market-currencies So what happens now? In Argentina, there is the prospect of capital flight, a sharp fall in the peso and higher inflation. In emerging markets more generally there is the prospect of contagion. Brazil, as Argentina's neighbour and a country already identified as one of the fragile five emerging markets (India, Indonesia, Turkey and South Africa are the others), looks most vulnerable. For the global economy, Argentina can be read one of two ways. Either it is a sign that the financial crisis of 2008 has a sting in the tail. Or it is the start of a new one.