‘Argentina has defaulted’, screamed the headlines in financial newspapers on July 31 this year. But it was not an accurate report. Argentina did not default. It was forced into default by a New York southern district court judge Thomas Griesa.
The Argentine government had deposited the payment of $539 million on June 26 – ahead of the due date – at a bank in New York to be transferred to the 92.4% bond holders. But Judge Griesa had blocked the transfer until Argentina paid the $1.3 billion plus interest, and also demanded by the vulture funds that hold just 1.6% of the bonds. Joseph Stiglitz, the Nobel Laureate, and Martin Guzman from Columbia University termed the artificial default “Griesafault ”.