Few Countries and global companies are exposed to the risk of contagion.
Economic history seems to be recurrent in Latin America.
Indeed, one of the first countries to experience a major monetary crisis during this century was Argentina. Today, his government asked the IMF for a brand new rescue package. But this last-minute correction does not work.
Two lessons have been learned from previous debt crises in Latin America:The direct impact on the general population, which already suffers from extremely high levels of poverty, is devastating;
The debt crisis of the early 1980s, which spread to almost every corner of the region, paved the way for Latin America's "lost decade". The Tequila crisis in Mexico in 1994-95 became so severe that it almost brought down some of the largest banks on Wall Street.
Now, as long as the U.S. dollar and U.S. yields continue to rise, emerging market turmoil can be expected to increase.
The weakness of emerging markets is now a generalized trend. The nervousness may soon spread to the two largest Latin American economies, Brazil and Mexico, which together account for nearly 60% of Latin America's GDP.
But it is not only countries that are exposed to the risk of contagion; the same is true for global companies that have a strong interest in the affected markets. Some companies are more exposed to Latin America than large Spanish companies. Some of them have already been burned during the last Argentinean crisis. But following the collapse of real estate in Spain, opportunities in that country have dried up so much that access to the fast-growing Latin American economies has become a boon. But it could quickly become a curse.