Because in the real world, bonds in the U.S. - both corporate and municipal - are rescheduled fairly frequently under court order, and with substantial "haircuts" in principal that can range from 25 to 75% or more. The haircuts allow defaulted debtors to resume payments to bondholders - and bondholders in turn obtain not only a resumption in payments they would have otherwise not gotten, but also higher interest on said bonds.
In Argentina's case the 10-13% interest these bonds have been paying has more than compensated for the 70% haircuts bondholders agreed to in 2005. Those who accepted the 2005 swap and held on to the bonds, moreover, have not only already recouped their investments by way of Argentine payments (and Argentina has never missed one since '05), the bonds themselves have more than doubled in value.
Argentina has already paid out $190 billion for bonds whose face value was $82 billion (and for which investors typically paid about half that much). Vulture funds, of course, have held out for even more - much more. In the case of the Cayman Islands-based NML Capital (who had Griesa block payments to holders of New York-Law bonds last July), the demand is $900 million for bonds purchased for $48 million. Their face value: about $220 million. Argentina has offered to reopen the swap for them despite domestic laws that forbid it, but to no avail.
Why? Besides being motivated by sheer malice (NML's principal, Paul Singer, is a right-wing extremist who was hoping to "punish" Argentina for having a center-left administration), NML needed a default because the valuable CDS insurance held against these bonds doesn't cash out unless a default is declared by the ratings agencies one way or another (which was in fact the case despite being that most of Argentina's bondholders are still collecting).
Now, to read much of what's written in the business press about this, you'd think none of this could ever affect U.S. taxpayers themselves. Think again.
Singer has already bankrupted Delphi Automotive (once the largest auto parts maker in the world) and Caesar's Entertainment using the same tactics; 50,000+ good jobs, right there. Atlantic City itself may soon follow. And remember the debt ceiling crises former GOP whip Eric Cantor was provoking at every turn? One of his closest backers was, why, Paul Singer. Now that Griesa gave vulture funds all the legal precedent they need (rewriting laws in order to allow holdouts to block everyone else's payments), what do you think will happen to the U.S. bond market if a default is manufactured in Congress?
A conflict of cultures would be putting it mildly.
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