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"The Argentine government right now is playing with a lit match and holding it on the lit ends," said David Fernández, an attorney at Buchanan, Ingersoll & Rooney. "If there's no stay July 31st is going to come and go and there will be default."
That means The Republic could relive the nightmare of 2001, when inflation soared and the value of its currency plummeted.
The weird thing is, it seems like Argentines are ready for that. They've been through the abyss before and survived, though recovery is still ongoing.
"I do not know whats gonna happen," says Federico Zaldua an Argentina-based trader on Itau BBA's Latin America bond desk. "I guess we shall settle. If we don't and bond prices plunge I will buy much more [bonds]. We are all looking into 2015 already."
In 2015 - default of no - President Cristina Fernandez de Kirchner and her administration will be gone. All the alternatives are more market friendly. It's one of the reasons why hedge fund managers like Mike Novogratz of Fortress Investments and Dan Loeb of Third Point Partners have said they're ready to invest once Argentina hits bottom.
Whatever bottom may be.
For now, though, Argentina is looking backward. This case is a throw back to the last disaster when this group of hedge fund managers, lead by Elliott Management's Paul Singer, picked up these bonds on the cheap. Since then, they've refused to take haircut on the debt like the rest of bondholders. The holdouts want 100 cents on the dollar.
To Argentina, that makes the "vultures." That's why The Republic refused to pay up, appealing it's case all the way up to the Supreme Court of the United States and eventually losing this year.
Along the way, lower Court Judge Thomas Griesa - who has been on this case since the beginning - has lost patience time and time again. Even now Argentina's Economics Minister Axel Kicillof has met with the Judge several times and each time Kicillof refused to negotiate with holdouts.
Kicillof, and the government in general, say that according to a clause in their bond contract - the RUFO clause - they can't voluntarily negotiate with the holdouts. If they do, other bondholders automatically are entitled to the same rate they give the holdouts, meaning the Republic could have to shell out $15 billion.
The holdouts argue that at this point negotiations clearly are not voluntary.
Given this history, Judge Griesa has little reason to believe Argentina will negotiate in good faith. The Republic, as it has been through all this before, could very well decide to plow through it again.
"When they defaulted before was it the end of the world? No. Was it painful? Yes," said Fernández.
That said, Fernández doesn't buy that Argentina will be able to turn it around in 2015 simply by having a new government.
"Part of the problem is that they're not completely out from underneath the first time they did it [default]... there's a lot of countries that won't trade with them, a lot of countries that won't lend to them," said Fernández.
He continued: "If they cross the default line and they go there [this time] it doesn't matter if 2015 happens... there won't be any liquidity for them."
The disaster does not come all at once. Last time Argentina defaulted it took almost a year for the country to spin completely out of control. Maybe - if it pays by 2015 thereby not triggering the RUFO clause - the government believes that it will be able to stop the bleeding before that happens.
"Normal Argentineans will keep on suffering the ongoing inflation and lower activity level until expectations change and somebody comes up with a real anti inflationary program," said Zaldua.
The question is how long will that take?