They have a socialist... possibly fascist government.... what did they think was going to happen??
In 2001, Argentina issued government bonds (Sovereign debt) in the American Market that were supposed to be guaranteed by their government.
Their debt collapsed a few years later and investors and bond holders were asked to receive less than 50% on the dollar or nothing.
One Hedge fund manager -— Paul Singer ( of Elliott Management, where coincidentally, Mitt Romney puts some of his money in), REFUSED the Argentinian offer and sued in court. He won too.
Singer has been trying for years and years to get Argentina to pay a 2001 bond it owes in full. Because it recently won a court judgment saying that Argentina owes it money, it was able to get an injunction from the government of Ghana saying it’s entitled to take the ship — ARA Libertad, a training ship owned by the Argentine navy.
Elliott Management and Argentina are learning the hard way, that in an insolvent world where there is no driving force to push the debtor and creditor to reach amicable, if increasingly more unpleasant outcomes (such as Europe, if only for the time being), one has to resolve to ever more unpleasant tactics to get what one believes belongs to them.
What this really means is that Western courts have decided that Elliott has not been stripped of pre-petition rights despite, or rather in spite of, holding out, and is entitled to collecting up to par recovery. There is one problem: there is absolutely no enforcement mechanism!
And therein lies the rub: because how does a court located on Pearl Street in New York order the Argentina State Treasurer located in Buenos Aires to wire a payment on bonds, via intermediary banks, that Argentina effectively has disowned? It can’t. Or rather, it can’t using peaceful means and/or simple M.A.D. coercion of the type one can apply in Europe (remember: Greek creditors had to agree to a massive haircut, and more to come, as the alternative was a Greek default, Grexit, collapse of the Eurozone, dissolution of the EUR, redenomination, massive losses on Spanish and Italian bonds, and who knows what other apocalyptic scenarios). It can, of course, use military means but the time for a Falklands-type escalation has not come yet.