Mexico, Venezuela and Argentina in big trouble?

April 23, 3:25 PMChicago Latino Community ExaminerSonia Gandara

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 Latin American countries in trouble

Yahoo! posted an interesting article on countries that can face some severe economic troubles. 

The scary part? Three Latino countries made the the top 5. Even scarier? Our southern neighbor was first on the list!

Here's what Yahoo! says about Mexico, Venezuela and Argentina:

Mexico:

Where's the first place people think of for a wild and crazy spring break?

Mmmhmm!

Many tourists from America and around the world had to cancel spring break trips to Mexico due to the disturbing and ongoing violence related to the drug trade.

Mexico was the second country recently identified by the U.S. Joint Forces Command as possibly poised for a "rapid and sudden" collapse. Mexico's "politicians, police, and judicial infrastructure are all under sustained assault and pressure by criminal gangs and drug cartels," says the report.

The violence and tourism decline could not come at a worse time. Economists predict a 3.3 percent contraction of the Mexican economy this year. The poor economic growth means that the government is getting strapped for funds. In April, it asked the International Monetary Fund for a $47 billion loan. While credit-rating agencies don't expect Mexico's debt to grow riskier soon, and the risk of its sovereign derivatives has not skyrocketed like some other countries, serious problems still remain for the Mexican economy. The country depends on the United States to consume its exports and pay Mexican immigrants who send money back home. If the U.S. recession deepens, Mexicans will feel the pain as much as Americans.

Now, that's some scary stuff!

Venezuela:

Venezuela's economy was successful because of one thing: oil.

Oil profits helped deliver massive economic growth, so much that a 4.8 percent growth in 2008 was seen as a disappointment!

Really?! Are you kidding me?! Well, they should've appreciated what they had because times are different now.

Oil prices have plunged due to the global slowdown. Many economists are predicting negative growth for Venezuela this year, such as the 4 percent drop predicted by Morgan Stanley.

From June to September, the cost for an investor to buy insurance against Venezuela's debt almost doubled. Right now, to protect $10 million in Venezuelan sovereign bonds against default, an investor would need to spend $1.8 million each year. S&P gives Venezuela's sovereign bonds a BB rating, meaning Venezuela faces "major ongoing uncertainties" that could lead to "inadequate capacity" to meet its obligations. S&P also has a negative outlook for the bond rating, meaning it could decline in the next six months to two years.

Argentina:

Let's face it, Argentina has had a "past," but things eventually improved.

Lately, foreign investors are a little worried about the economy.

CMS Datavision ranks Argentina as having the third most expensive credit derivatives in the world. Right now, Markit composite prices show an annual cost of $3.2 million for an investor to buy protection against $10 million of Argentina's sovereign debt. Moody's rates Argentina's sovereign bonds as B3, meaning a high, speculative credit risk, and S&P as B-, meaning that more bad economic news for Argentina could lead to default. The Organization for Economic Cooperation and Development gives Argentina a seven, its riskiest classification rating.