LEAKED: Embarrassing Memo Could Ruin Argentina's Chances Of Getting Back In The World's Good Graces

Argentina is really trying to show the world that it's making good on its debts lately, but $4 could negate every last show of faith, according to Reuters.

It all comes down to what the Supreme Court thinks next week, in a decision that could send the ailing country into default (worst case scenario).

Here's the backstory: Since Argentina's economic crash in 2001, the country has a been a pariah of the international financial community. Now it is facing the consequences of its isolation - it's running out of cash. The head of its $4.

These are dire straights, so Argentina is running around paying debts left and right. For example, it just cleared of $4 it owes The Paris Club last week.

A memo leaked out around the same time, however, is casting doubt on the country's sincerity in terms of one key matter - its ongoing Court case against U.S. hedge fund managers who refuse to restructure $1.3 billion of debt dating back to 2001.

To observers, this case embodies the ideological intransigence of President Cristina Fernadez's regime.

Argentina has said over and over that it will not pay these "vulture" hedge fund managers, which has annoyed U.S. judges to no end.

The recently leaked memo reaffirms that sentiment. It's a plan from Argentina's lawyers, including Carmine Boccuzzi of Cleary Gottlieb Steen & Hamilton, which outlines how it could still evade paying back the $1.3 billion by going into default and then restructuring outside the country.

"There is no secret plan to evade," $4. He went on to maintain that default would catastrophic for the country, and is still situation no one wants to see.

This non-plan would only need to go into action if The Supreme Court decides, on June 12th, that it will not hear Argentina's case. If not, a lower Court ruling by New York Judge Thomas Griesa stands - and he put the absolute smack down on Argentina.

At the end of 2012, Griesa decided that Argentina should pay the hedge fund managers - including billionaire Paul Singer, who had an Argentine naval vessel impounded in Ghana for collateral (and kicks, we think).

In order to comply with the terms of the Injunctions, Argentina must pay plaintiffs 100% of that $1.33 billion concurrently with or in advance of the payments on the Exchange Bonds. . .These provisions [of the Injunctions] properly start with the fact that if 100% of what is currently due to the exchange bondholders is paid, then 100% of what is currently due to plaintiffs must also be paid. . . But the fact is that the amount owed to plaintiffs by Argentina is the accelerated principal plus accrued interest. Argentina owes this and owes it now.

$1.3 billion is doable for Argentina, but it's not about the money, it's about the intractibility of the Argentine government. And that doesn't just go for the country's political ideologues, investors want to see that Argentina can play by a set of rules.

If it can't play by the rules, investors won't play with Argentina at all.

This became particularly clear in May. Argentina announced that Buenos Aires would issue $4 Before it could sell anything though - and even after it had made nice with the Paris Club - the auction was called off,$4. Interest rates were simply too high at 13.5%.

Now imagine what could happen to those costs if the Supreme Court kicks Argentina to the curb...