Judge Griesa's ruling, and the Supreme Court's decision not to review it, is not a moral issue- it's a matter of LAW, plain and simple. Argentina made the decision in 1994 to sell these sovereign bonds under New York law AND waived their sovereign immunity for this particular bond issue. Why did Argentina make these decisions? Because it allowed them to sell these bonds near par at a reasonable interest rate. Why do investors choose to buy bonds issued under New York law? Because New York (and the USA a a whole) is a place with strong contract law and a legitimate and independent judicial system.
That being said, there is an almost zero chance that Argentina will default as a result of this ruling ordering that all bondholders be treated equally; as incompetent as the Kirchner administration is, even they can see it is not in their or the nation's interest to default. The K's have been attempting to get the debt situation in order via settling up with Repsol, Paris Club, CIADI, etc and entering into default would unravel everything and bring the country back to pariah status. This ruling really only puts Argentina immediately on the hook for $1.5 Billion USD; as this "better offer" was not voluntarily agreed on by Argentina and was in fact imposed on them by Griesa, the dreaded RUFO clause in the 2005 and 2010 exchanges would not have a legal leg to stand on. Almost certainly the government will negotiate with the beneficiaries of the ruling and will come up with an agreement to pay less than half the $1.5 Billion USD in cash and the rest in bonds.
