It is not clear whether Elliott expected Argentina to meet its demands by now. The firm managed to obtain payments from Peru and Congo-Brazzaville in somewhat similar cases. Elliott's supporters assert that the bets that rely on suing governments and state-owned entities make up only a small proportion of its portfolio, and they add that the firm does not pursue countries that are clearly unable to pay their debts. Argentina, they say, is a particularly recalcitrant debtor that clearly has the wherewithal to pay the holdouts.
Mr. Singer, however, thinks that there are broader reasons to protect creditor rights. In particular, he has argued, doing so will help bolster a country's economy. "Imagine how much capital a country like Argentina might attract," Mr. Singer wrote in a 2005 article he wrote with Jay Newman, another Elliott employee. "If instead of defaulting seriatim and affecting a pose of anger toward creditors, it borrowed responsibly and honored its obligations."
The big question, however, is whether Argentina will ever pay Elliott what it wants. If the firm fails to collect, that would underscore the limits of its legal strategy. There is no international bankruptcy court for sovereign debt that can help resolve the matter. Argentina may use the next few months to try to devise ways to evade the New York court. Debt market experts, however, do not see how any such schemes could avoid using global firms that would not want to fall afoul of Judge Griesa's ruling.
Read MoreS&P cuts Argentina's credit rating further as talks drag on
But some debt market experts say that credit market idealists are going too far when applying their worldview to sovereign bond markets. In dire economic crises, they say, countries need to be able to slash their debt loads. The legal victories of the holdouts may embolden creditors to drive harder bargains after future defaults, these people say.
Professor Stiglitz says that this could prolong or postpone debt restructurings and extend the economic misery of over-indebted countries. "Singer and Elliott have already done a lot of damage," he said.
In Buenos Aires, some were resigned to the consequence.
"It doesn't matter if it is a judge in New York City or a president in Argentina, I feel that neither cares about people, and about the future of this country," said Sol Bodnar, 31, a film producer. "It's as if these people who have power were laughing in the face of us common citizens."
Simon Romero, Irene Caselli, and William Alden contributed reporting.
—By Peter Eavis and Alexandra Stevenson, The New York Times