All across Buenos Aires, there are clandestine currency exchange operations; strictly enforced caps on the amount of money one can exchange have created a thriving secondary market in US dollars. To get an accurate reading of the exchange rate, we must turn to these illegal outfits, and the picture is a grim one. By the day, more porten?os (the name given colloquially to residents of Buenos Aires) are trading in their Argentinian pesos for the stability of the US dollar, causing the Argentinian peso’s value to tumble and imported inflation to climb ever higher. As it stands, 2014 is likely to go down as yet another year of crisis in the blighted modern economic history of Argentina. Just 13 years after the country flirted with complete economic and social collapse, it has suffered yet another messy default, thanks in large part to stubbornness and poor governance on the part of President Cristina Ferna?ndez de Kirchner.

Let us rewind to 2011. Everything was looking up for the former jewel of the Southern Cone. Real economic growth was north of 7.5 percent, inflation was under control, and the Argentinian peso was experiencing remarkable stability both officially and in the black market. The country was also on the verge of rejoining polite international economic society, thanks to two debt-restructuring deals, signed in 2005 and 2010 respectively. The vast majority of investors had agreed to a significant write-down on the debt left over from the 2001 default, and so the country was able to take tentative steps towards rejoining international financial markets. However, some investors did not sign the deals in 2005 and 2010, choosing instead to pursue a legal settlement that would reward them the entirety of their due return.

In early 2014, these investors won their legal battle, and a court in New York City ruled that the government of Argentina had to pay them what they were owed. Citing an equal treatment clause in the 2005 restructuring deal, which mandates that all investors are treated as the one that receives the best treatment, Argentina’s government opted not to pay, since to pay these investors in full would require paying all of the investors in full. However, the debate surrounding whether the clause would actually have applied, given that it was a legal settlement forcing the government to pay and not a choice to treat certain investors differently, was largely ignored. Instead, President Kirchner chose to take a firm stance on the issue, decrying the meddling of US “vulture funds” and extinguishing any hope of a last minute settlement. This caused the country to stumble once again into defaulting upon its sovereign debt, stifling any nascent hope in Argentina’s ability to maintain macroeconomic security.

So as we enter late 2014 and the new year, the outlook is bleak. In a desperate attempt to regain control of the plummeting peso and maintain what remains of the country’s meager currency reserves, President Kirchner orchestrated the resignation of Juan Carlos Fa?brega, the governor of the central bank at the end of September. In his place, she appointed Alejandro Vanoli, whose qualifications are scarce apart from his vocal support of the executive. His job is going to prove almost impossible. The Kirchner government radically opposes further devaluation of the peso, but Vanoli doesn’t have access to the necessary reserves to prop up its value, especially as more and more of the population begin to consider switching their cash to US dollars to avoid the volatility of their home currency. Inflation is rearing its ugly head—already well into double figures and climbing—and growth has stagnated, leaving Argentinians with little to celebrate.

To reverse Argentina’s fortunes, both the central bank and the government must take decisive action. First, the peso should be allowed to devalue. Yes, this will exacerbate imported inflation for a time, but it is a price worth paying for a return to growth. Devaluation would likely increase exports and reignite real GDP growth. Second, and most importantly, the government needs to bury the default issue forever, so that the country can return to, and stay in, international financial markets. The best way to do this would be to settle the remaining disputes regarding the overhanging debt from the 2001 debt, and then do everything possible to convince the international community that Argentina has turned an economic corner. A large part of this would be achieved by bringing about macroeconomic stability, however President Kirchner must also repair relations with the developed world and drop the anti-US rhetoric that has marked her public persona this past year. This remains very possible, if only the President were able to offer some humility and pragmatism in the face of the economic nightmare her country faces. However, Kirchner’s platform is based upon the populist rejection of perceived US interference, and so she will most likely shy away from any deal. Sadly, this means the Argentinian public is likely to be stuck in stasis, if not decline, until at least the next election, in which she is ineligible to run.

The most worrying aspect of this dark portrait of Argentina is that it is indicative of a general negative trend throughout the Southern Cone of South America. Yes, the troubles of Argentina’s surrounding countries are not the same as its own, yet the simultaneous decline of the majority of the continent is nothing to be shrugged off. After a decade of rapid growth, Brazil slowed to a crawl, and then fell into recession. Brazil is also struggling with an image problem, as the infrastructure projects linked to the 2014 FIFA World Cup Finals and 2016 Olympic Games have come under fire for squandering public money and exploiting labor. It is losing the goodwill of the international community, and should be well aware of the danger of doing so. Not long ago, Brazil was counted alongside India and China as a future driver of growth in the developing world. Now its name is merely grumbled as a synonym for wasted potential and underperformance. Chile too, the long-time success story of the Southern Cone, is struggling with the weight of ever-rising economic inequality and growing civil unrest (especially among the younger generation) over the provision of public services such as higher education. Before long, Chile could also inherit some of its neighbors’ economic malaise; although its export portfolio is globally diverse, it cannot escape totally unscathed from the stagnation gripping Brazil and Argentina. This contagion spells bad news for the entire continent, because no other country is capable of driving South American growth.

However, if Argentina can reverse its fortunes, it could mark the beginning of yet another fruitful burst of growth for South America. A large part of the continent’s potential remains untapped, and a return to growth in the Southern Cone would likely mark the beginning of a virtuous cycle of more positive animal spirits—business and consumer confidence—and therefore increased foreign investment. For the sake of South America, Argentina and the rest of the Southern Cone must do their utmost to engender macroeconomic stability and prosperity.