Last week, I wrote about a wave of good news for political and market stability in several Latin American countries.

Then there's Argentina.

Faced with an increasingly uphill struggle in financing a highly expansionary fiscal policy and with no desire to reduce government spending, Cristina Fernandez de Kirchner's government has refused to back down. They've now doubled down on a bid to reassert political control by claiming ownership of central bank funds with no clear room for compromise. The ruling Peronist party has already lost control of congress, and now it has drawn the judiciary into the fight over funds.

Argentina's opposition doesn't agree on much, but there is consensus that the Kirchners have now forced a fight worth having. A government battling for its survival won't have much time or political capital to spend on anything else. The current political crisis might even delay Argentina's plans to restructure the $20 billion debt in default.  As early as next week, both houses will probably reject a presidential decree establishing a "Deleveraging Fund" that the government hopes to use to tap $4.3 billion in central bank reserves to meet the debt obligations.

This is the most serious political crisis in Latin America. Fernandez de Kirchner's term will end in December 2011. She's determined to prove she's no lame duck, but her aggressive style may prevent her from even reaching the finish line.

Ian Bremmer is president of Eurasia Group.

My conversation with colleague and friend Nouriel Roubini continues today on our political and economic expectations for key regions in the year ahead. Today, we talk about Europe.

Bremmer: We're seeing the return of political risk to the Eurozone in a big way, as the line between developed and developing states becomes a little less distinct. Member states' coordination on fiscal policy has been breaking down for awhile, but a sharp economic slowdown has made matters worse. Markets may be underestimating risks of default among the most vulnerable; EU support is something less than a sure thing. Even without a default, governments will respond to economic stagnation with spending meant to prop up vulnerable sectors. As in the United States and China, it's all about jobs, jobs, jobs, and jobs.

In fact, stubbornly high unemployment is an especially serious problem in Eastern Europe, where a host of elections in 2010 could heighten tension and stoke unrest. Upcoming elections in a number of key countries materially increase the likelihood of instability. Nervous policymakers and legislators will face the temptations of channeling the frustration and anger of the unemployed with protectionist, populist, even xenophobic policy plans. Ukraine, Hungary, and Latvia are especially vulnerable, but even Poland could hit some turbulence.

Another issue to worry about: If one of the big Western European banks active in Eastern Europe finds itself in trouble, rescue efforts could become a mess.

Roubini: The recovery of the Eurozone and the rest of the advanced economies in Europe will also be anemic and below trend for several reasons: Potential growth in the Eurozone (2 percent) is lower than in the United States (closer to 3 percent). Most Eurozone economies could not do much counter-cyclical fiscal stimulus as they started -- even before the crisis -- with large fiscal deficits, large stocks of public debt, and financial systems that are both too big to fail and too big to save, because the sovereign does not have the resources to bail them out in case of a systemic crisis. Indeed, sovereign risk is rising in the Eurozone -- currently in Greece and Ireland but soon enough in Spain and other periphery economies. The European Central Bank has followed a tighter monetary policy than the Fed and may exit from low rates and QE sooner, thus hampering the economic recovery. Financial institutions in Europe have not fully recognized the losses on their toxic assets and have large exposure to Central and Eastern Europe, where the economic and financial crisis are not yet over. Moreover, the strength of the euro is hampering the recovery of the Eurozone economies, and the Club Med economies have both a competitiveness and a public debt problem, as nominal wages rising faster than productivity have led to rising unit labor costs, real appreciation, and large external imbalances. Thus, even the viability of the European Monetary Union may be challenged over the next few years.

Ian Bremmer is president of Eurasia Group. Nouriel Roubini is a professor of economics at New York University's Stern School of Business and chairman of RGE Monitor.

My conversation with colleague and friend Nouriel Roubini continues today on our political and economic expectations for key regions in the year ahead. Today, we move to the Persian Gulf.

Bremmer: It's much smoother sailing this year in the Persian Gulf, despite Dubai's well-publicized troubles and the multiple-front fighting in Yemen. Saudi Arabia is looking especially strong. The oil price rebound has boosted the Saudis more than many other oil producer thanks to its conservative budgetary assumptions, and it looks as though the eventual political succession process will be handled smoothly. Most importantly, the Saudis are realizing the potential of long-neglected sectors, regions, and segments of the population. The socially more liberal Bahrain is doing the same. Abu Dhabi has politically stabilized the UAE.

Roubini: The collapse of oil prices during the global recession led to a massive slowdown of growth in the Middle East, but the recovery of oil prices from a low of $30 in early 2009 to levels ranging from $75-$80 in recent months has triggered a recovery of growth and an improvement of fiscal conditions. Dubai's troubles may reverberate in other parts of the Gulf, where a real estate bubble took place, but they will otherwise be contained. Policymakers throughout the Middle East have the medium- to long-term challenge of investing in infrastructure, education, health, and other public services to improve the skills and economic opportunities of growing numbers of young people, diminishing the political threats that rising Islamist movements in both Sunni and Shia countries engender. As long as oil prices remain at current levels, the budgets of the region's energy-exporting economies will allow this crucial structural transformation and modernization of these economies while containing risks of social and political unrest. These structural reforms need to be accelerated. In countries like Saudi Arabia, a lost generation of youth raised on Islamic education alone lacks the skills to be productive in a modern economy.

Ian Bremmer is president of Eurasia Group. Nouriel Roubini is a professor of economics at New York University's Stern School of Business and chairman of RGE Monitor.

I've been comparing notes with my colleague and close friend Nouriel Roubini on political and economic expectations for a few key regions in the year ahead -- a back and forth that's resulting in a global forecast for 2010. 

Today, we begin with Latin America.

Ian Bremmer: I do think we can expect a solid recovery in Latin America in 2010, as most governments in the region profited from sharply improved macroeconomic fundamentals to survive the slowdown with minimal damage. But a busy electoral calendar over the next two years, highlighted by Brazil's presidential election in October, will tempt policymakers to inflate their political popularity via heavy state spending. Governments like those in Brazil, Mexico, Chile, and Peru will benefit from the sound macroeconomic policies of recent years. Political officials in places like Argentina, Venezuela, and Ecuador may find their popularity built atop shifting sands. The Cristina Fernandez de Kirchner government in Argentina, faced with rising inflation and an increasingly hostile congress, will prove especially vulnerable.

The really interesting story this year is in Brazil, where oil wealth and President Lula's popularity have seduced the government into less disciplined macroeconomic policy and a more statist approach to foreign investment and strategic economic sectors. Lula's preferred presidential successor, Dilma Rousseff, should be considered a slight favorite to win. If she does, she'll deepen state involvement in Brazil's economy. If opposition candidate Jose Serra wins, we'll see less bias toward state-owned enterprises and tighter fiscal policy. Whoever wins, there is one obvious wide-open sector for foreign investment: transport infrastructure. There's a lot of work to do to prepare Rio for the World Cup in 2014 and the Olympics in 2016.

Nouriel Roubini: Latin America is divided between economies that follow market-oriented policies (while attentive to social issues) such as Brazil, Chile, Uruguay, Colombia, Peru, and more populist governments in Venezuela, Bolivia, Argentina, and Ecuador. The latter group maintained its political popularity and solid economic performance given that commodity prices recovered, but some of these regimes are fragile and weakening. Venezuela's recent devaluation is a signal of a seriously mismanaged economy; in Argentina, the popularity of the Kirchner duo is faltering and the next president -- whoever he may be -- is expected to be more moderate and market friendly; Ecuador's Correa populism is kept in check by the popularity of dollarization.

Even in market-oriented economies, important structural reform challenges remain. In Brazil, Lula maintained macro stability (sound fiscal policy and independent central bank but with some recent slippages in fiscal discipline), but he failed in implementing structural and micro reforms that would accelerate the potential growth of Brazil. Implementation of those reforms will depend on whether Jose Serra or Dilma Rousseff is elected president. In Chile, Pinera will have to work hard to ensure that more aggressive market-oriented reforms don't lead to a return to greater income and wealth inequality.

Throughout Latin America, democratic transitions require that presidents (i.e., Uribe, Lula, Correa, and Chavez) avoid tinkering with constitutions and electoral laws to seek endless terms in power. Otherwise, the nefarious regional tradition of strongmen and caudillos will return. Alternation of power is necessary to strengthen democratic institutions.

Ian Bremmer is president of Eurasia Group. Nouriel Roubini is a professor of economics at New York University's Stern School of Business and chairman of RGE Monitor.

Decided against the Bill Clinton event last night -- primarily in the interests of sleep. Due apologies. He's scheduled at a Coca Cola reception tonight, so I'll probably catch him there.

I did spend some quality time with Andrew Ross Sorkin. We were typing away on dueling computers, both generally unaware of each other ... until I finished up and looked over to my left. Lovely fellow. Surprisingly unselfpossessed given the extraordinary success of his recent book, Too Big to Fail.

We don't know each other well, but I particularly wanted to discuss the book with him. In part because I'd been recommending it to friends who refuse to read anything on the financial crisis. But mostly because it's such a complicated story that he handles with remarkable balance and discipline. 

Andrew said his view on writing the book was akin to Tarantino directing a movie -- he wants everyone coming away believing they've read a different story. Interesting, clever, probably not my take (I generally want everyone to "get me." Though I suspect my general urge to be liked is greater than Andrew's.) 

From my perspective, the thing Andrew got truly on the money, as it were, was his sense of humanity around all the major bankers (I think the public sector folks got a bit of a rougher ride). In 30 years, presuming a conversion, I suspect I'd like Andrew to be my rabbi. Perhaps unsurprisingly, the subjects disagreed. I didn't discuss the book with Merrill Lynch's ex CEO, John Thain, but I know him well ... and thought quite well of the portrayal. Not John's view, says Andrew. Same on Lehman's Dick Fuld -- and his annoyance with the book I've already heard from Dick's old friends.

Maybe the better take on Too Big to Fail is that if everybody finds something to criticize, he's hit it just right. Nah, that's clearly not right either. Just read it.

I attended a dinner on alternative energy, hosted by Liz Claman over at Fox (previously CNBC), with a couple of heavy energy hitters and the ever-present Tom Friedman on the panel. 

It was a pretty bleak couple of hours, given the aftermath of Copenhagen. Most surprising to me was a snap poll of the room, which had about 100 in attendance -- I'd say 60 Americans - asking who thought some form of climate change/energy bill would pass in congress by June. Zero folks raised their hand. (Problematic methodology warning -- it's harder to raise your hand than to keep it down, but still...) By next June? About 25 percent, 30 percent if I'm feeling generous. And it's late, so I'm not particularly.

Tom Friedman, in his every year Davos garb (casual oxford and sweater), had the most enjoyable quote of the evening: "If horses could vote, we wouldn't be driving cars." Really makes me glad we've limited suffrage.

I have no idea if that was already in a Friedman column. Or even Hot, Flat and Crowded. (My apologies, Tom). But having said that, my snap view is that he's a national treasure. He tends to be sensible, he works/travels the world like a banshee with near unparalleled access, and -- most importantly -- he actually speaks English. Crowds of all shapes and sizes can actually relate to what he's saying. They don't tune him out, even when they're jetlagged after a long overnight flight to Zurich. 

I'm convinced we'd be in a much better place on climate change if most serious climatologists could actually present in plain English and engage an audience.

Case in point from dinner: The truly lovely Bangladeshi economist Muhammad Yunus. He is charming one-on-one, and doing tremendous work bringing affordable alternative energy (solar power) to villages throughout his country. But his ponderous intervention, late in the dinner, three times returning to the importance of having the people running the country and not the government, had everybody scratching their heads. Affably, mind you. But still.

One more meeting, and then there's a Clinton thing (he's been ubiquitous today ... and the one fellow at Davos that folks are stopping to take pictures of) that I'd like to attend. Word is Clinton's talking about Haiti. And losing his voice. We'll see.

Ian Bremmer will be blogging from Davos this week sending reports and commentary from inside the World Economic Forum.   

One of the most frequently cited reasons you hear that attendees come out to Davos is that you can do about one month of meetings in 5 working days. In the ever faster, hyper-productive, blackberrified world, that's about as compelling an argument as you can have.

For the record, I hate blackberries. They don't sit well with my underlying sense of balance (or my tendencies towards compulsiveness), and it would make my colleagues utterly miserable. So I don't do it. Neither does U.S. Congressman Barney Frank, who I met with this morning. He then went further. "I don't do blackberries, I don't know CPR, and I can't put out a fire," he told me. His work is important, but apparently he's useless in emergencies.

Fortunately, nothing was burning during the CNBC debate this morning. Though Barney did get himself plenty worked up. We got into it a little bit on U.S. military spending, of all things. His top argument for balancing the budget was to slash military expenditures. I managed to get him to admit we needed more funds for cybersecurity. His fallback position was to stop spending for weapons that don't have enemies. If I could get him to add the caveat, "likely enemies over the next 20 years," I think we'll have a winner.

Read on

1) Had a quick aside with a journalist friend from the gulf; we quickly agreed on the most notable absence from the proceedings -- Dubai. Shouldn't be surprising, given how extraordinarily savvy they've historically been at branding themselves and generally speaking the vocabulary of globalization. Call them the Tiger Woods of the World Economic Forum.

2) Conversation with a senior member of the official U.S. delegation. Their highest priority here on the foreign policy side -- getting a strong message across to China. Apparently they've been given pretty broad parameters to talk tough on cybersecurity in particular. To quote: "Google isn't such a big deal, but what it represents is enormous." The Obama administration wants Beijing to understand there are serious consequences if there's no change in behavior.   

3) Breakfast with one of the American CEOs; he's most worried about regulatory policy globally and limitations on capital flows accordingly. I suspect we'll see a huge amount on this issue over the course of the meeting -- after all, the world economic forum has historically been the voice of globalization. With a few exceptions this year, it still will be. But the challenges are getting harder to ignore -- all sorts of signals that the world is now moving in a different direction. 

Ian Bremmer will be blogging from Davos this week sending reports and commentary from inside the World Economic Forum.