As Argentina teeters on the brink of default, it’s worth looking at other possible defaulters in the world debt markets, and what nasty things their default might do to the world economy. As usual in this column, it’s not a pretty sight.

Analyzing and commenting on the unwinding of the 1996-2000 stock market bubble is a pleasurable activity, particularly for someone who sold all his stocks in late 1995 because the market had got too high. The formerly overpaid 28-year-old dot-commers are very highly qualified; they will get other jobs, even if they have to go back to wearing a suit to the office. The day-trading speculators and investors, who believed the late 90s hype about a productivity miracle will lose their money, but this will make them better investors in future, with an understanding of why fundamental valuation and dividend yields matter. In neither case are we talking destitution, though certainly if the inevitable recession proves both deep and lengthy there will be some sad casualties at the bottom of the U.S. economic pecking order.

In the case of Third World debt defaulters, the human implications are much more serious. Even Argentina, a country which has been living above its means since about 1929, with only modest interludes of sober economic reality, could see a drop in living standards that will make the woes of the dot-commers and day traders seem trivial in comparison. Other potential defaulters, such as Indonesia, the Philippines and South Africa, are much closer to the edge of human misery already, and the suffering will be correspondingly worse. This column has in the past perhaps shown a tendency to gloat over economic misfortune; such gloating can be justified in the case of a U.S stock market crash, but not here.

Make no mistake about it, the problem is very widespread. Looking only at countries with large amounts of debt outstanding compared with their foreign reserves, countries where there must be a substantial risk of default in a deep depression or with bad economic management include: in Latin America Argentina, Brazil, Mexico and Venezuela, in Asia Indonesia, Pakistan, the Philippines and Turkey, plus Russia and South Africa. Ten countries, with a total population of 983 million and a total debt load of $883 billion. In addition, there are smaller problem countries, including Ecuador, Peru, Sri Lanka, Tunisia, Ukraine and Uruguay, where the statistics on debt and reserves are as unfavorable, but the numbers are smaller (these would include a large number of basket cases, the “Heavily Indebted Poor Countries” where debt relief (i.e. write-offs) has already been partially granted by many lenders.) Then there are other countries, including Bulgaria, Colombia, Hungary and Thailand, where the numbers are somewhat better but there must still be an element of risk were the world to suffer a 1930s-style depression. Finally, there is China, a country whose international statistics are favorable, but where there is an unrecognized domestic bad debt in the banking system of 70 percent-80 percent of gross domestic product.

There’s no doubt that Argentina is the worst off of the “Top Ten” list; it has a debt to merchandise exports ratio of more than 600 percent, more than 50 percent above that of any other member. Furthermore, its debt per capita is $4,115, more than double any other of the “Top Ten.” To balance its books, and enable it to return to international markets after some kind of “restructuring” Argentina must at least double its feeble exports, which probably means that living standards in the country need to be about halved. It’ll be a long decade in Buenos Aires.

Brazil has the second-highest level of foreign debt to merchandise exports, at just under 400 percent, but its debt to GDP ratio is only about 25 percent. Again, Brazil needs a sharp increase in exports to service its debt, but since international trade is so small a segment of the economy this may be feasible. The danger with Brazil is that it has a 1988 Constitution written by the left, and hence necessary public sector restructuring is extraordinarily difficult. That combined with a big recession and a left victory at the 2002 elections would push it over the edge.

Mexico of course has the advantage of very high exports to the United States, and its foreign debt to GDP ratio is in any case moderate. Here a U.S. recession could cause problems, while privatization and reform, which would help the picture, appear to be installed firmly on the back burner for now. Oil prices are however probably not a major problem, because of the size of Mexico’s non-oil economy.

Venezuela, as a major oil exporter, should at least be immune from major debt problems, but in fact its foreign exchange reserves are very low and its debt quite high, more than 40 percent of GDP and 151 percent of exports. Here social conflict appears inevitable, as the middle classes react with increasing anger to President Chavez’ Castroite decrees. Social turmoil here could interrupt the oil flow, which would quickly make Venezuela’s position untenable.

Indonesia is one of the more worrying countries on the “Top Ten.” Very poor, with rapid population growth, it has shown little in the way of reforming zeal, and it seems likely that the Megawati government will continue weak and relatively non-reformist. This in turn could well lead to political unrest, while a drop in oil prices would cause severe balance of payments problems.

Pakistan has very high debt to exports ratio, although its per capita debt is low because of the poverty of the population. Since the population is large, the debt relatively modest and the country politically critical at present, foreign aid flows can be expected to bail out Pakistan’s debt problems, at least in the short term.

The Philippines is another critical case, with the highest debt to GDP ratio of any of the countries on this list (including Argentina), a domestic insurrection and a weak government, although its export levels are fairly satisfactory. Serious problems are likely in the event the world recession is prolonged.

Turkey has a very high ratio of debt to exports, third of the “Top Ten” but its debt to GDP ratio is modest, and it has greater flexibility than the very poor countries on the list. Currently, Turkey appears to be taking the necessary reform steps; it is not however clear whether Turkey’s political determination will survive for long enough to weather the difficulties.

Russia has relatively favorable debt/exports and debt/GDP figures, following its partial default in 1998. Here the only likely problems would be a sharp decline in oil prices, which would destabilize Russia’s trade balance, or a political upheaval that placed in power a seriously anti-market government.

South Africa, while currently in a better position than most other countries on the list, has been able to attract more funding than its neighbors because of its politically fashionable transition. With a very rapid rate of population growth, the worst HIV/AIDS problem in the world, and a government that is likely to get worse rather than better (because the country is more or less structurally a one party state) South Africa could run into serious problems in the medium term, but probably not yet.

Thus of the 10 large, heavily indebted countries with low foreign reserves listed above, about half are in danger of debt default, with consequent cutoff of resources and sharp decline in domestic living standards. Of course, a series of defaults on that scale, involving say $400 billion of debt, would also severely erode the balance sheets of the major international banks and multilateral institutions, thus providing a further recessionary downdraft at a time of greatest economic danger.

But it’s the inhabitants of the countries themselves who are likely to endure real suffering.

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(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)

This article originally appeared on United Press International.