Things were already bad enough for the beleaguered presidents of Brazil and Argentina. Now they are moving closer to the edge of disaster.
Both Dilma Rousseff of Brazil and Argentina's Cristina Fernandez de Kirchner were facing a daunting list of economic, fiscal and political challenges before long-simmering scandals began boiling over. The separate cases underscore the difficult transition to modern open economies faced by countries with long histories of corruption, weak institutions and deep income divides.
Ms. Rousseff's biggest current headache stems from a mushrooming bribery, fraud and money-laundering scandal that has enveloped state-controlled oil giant Petrobras and reached into the senior ranks of her fractious ruling coalition.
The company's chief executive, Maria das Gracas Foster, a friend of Ms. Rousseff, and all five directors departed Wednesday, largely because of their failure to tamp down the scandal, even though Ms. Foster had nothing to do with the dealings in question. Indeed, much of the allegedly illegal decade-long activity occurred in the years when Ms. Rousseff herself chaired the board between 2003 and 2010.
Investigators allege that Petrobras executives colluded for years with big construction and engineering companies to award contracts and inflate their value. Much of the extra cash was laundered through front companies and large sums allegedly ended up in the coffers of Ms. Rousseff's Workers' Party and its allies.
The steep fall from grace of Brazil's largest and best-known company, one that has long been a mainstay of emerging-market debt and equity portfolios, comes at a time when plunging energy prices have made its costly offshore projects uneconomic and its financial situation more precarious.
Petrobras, which delayed reporting its third-quarter numbers until last week and then only released unaudited numbers with no provision for corruption-related losses, is clinging to the bottom rung of the investment-grade ladder. It will almost certainly fall into junk status soon. And it could be joined by the financially challenged government, which reported a record budget deficit for 2014 and faces big demands on a shrinking public purse as the economy hurtles toward a second recession in just a year.
In Argentina, meanwhile, Ms. Fernandez's tenure veers between scary and stupid. Alberto Nisman, the prosecutor investigating whether the government covered up alleged Iranian complicity in the 1994 bombing of a Jewish community centre in Buenos Aires, died last month from a bullet to the head just before submitting his report. But he left behind a draft warrant dated last June for the arrest of the President and her Foreign Minister.
Ms. Fernandez has denied there was a cover-up and blames rogue intelligence operatives for Mr. Nisman's death (after first labelling it a suicide). Neither she nor any cabinet minister can be arrested unless Congress removes their immunity. That's something the politicians may want to consider after Ms. Fernandez's latest startling display of poor judgment.
While on a visit to China to drum up more investment for the recession-ridden Argentine economy, she poked fun at her hosts' accents in a tweet by replacing the letter r with an l, as in (translated from her Spanish): "Did they only come for lice and petloleum?"
Ms. Fernandez quickly said she was sorry. But neither she nor Ms. Rousseff has apologized for their part in running their respective economies into the ground.