Protesters holding a mock vulture in front of a sign that reads “No layoffs” rally in front of the factory of U.S. automotive supplier Lear on the outskirts of Buenos Aires on July 30, 2014. (Enrique Marcarian/Reuters)

Argentina slipped into default last night after failing to reach agreement with a group of unpaid bondholders.

While the news was bad for Argentina and its economy, most analysts expected the global fallout to be limited in part because Argentina has been locked out of the world’s credit markets since its $100 billion default in 2002. There was little worry about  “contagion” and no air of  “crisis” — either globally or in Argentina itself, where the story was competing for attention in news outlets with the surprise death of the longtime president of the national soccer association and a video of Orlando Bloom punching Justin Bieber.

“Argentines can remain calm because tomorrow will just be another day and the world will keep on spinning,” said Economy Minister Axel Kicillof.

A woman walks past a graffiti that reads “No to the debt payment” in Buenos Aires on July 28, 2014. (Marcos Brindicci/Reuters)

Ratings agency Standard & Poor’s classed it as a “selective” default, meaning that the government has elected not to pay some of its debt but not all. It can pay — but won’t.

Specifically, the government doesn’t want to pay hedge funds — which it describes as “vultures”– the full value of bonds they hold and went all the way to the U.S. Supreme Court in an unsuccessful attempt to avoid doing so. Other creditors agreed to take reduced payments, but not the hedge funds.

It’s not that Argentines didn’t care. Default has the potential to do considerable damage to the domestic economy. But they appeared to be resigned to it with little expectation that negotiations with aggrieved bondholders would produce anything, which they didn’t. Social media was filled with jokes about why the government of President Cristina Fernández de Kirchner wouldn’t actually admit to default even after it actually happened.

“This is not a default,” declared Kicilloff, Argentina’s economy minister, noting the government had paid 93 percent of its bondholders. “Tomorrow will be a new day and we need to carry on,” he told reporters. “Don’t have any doubts, we are open to dialogue with everyone as long as conditions are reasonable.”

In fact, the president and her party (FPV) staked considerable political capital on not paying the hedge funds, papering the country with images of vultures and characterizing the hedge funds as predatory beasts.

Graphic artists imagined Kirchner as an Argentine heroine fighting back the vultures with her late husband and former president Nestor Kirchner watching over her from the sky.

Here’s some of the vulture art:

La pelea con los #FondosBuitre #DecileNoALosBuitres #SeTrataDeNuestroFuturo #PatriaOBuitres

— Encuentro Comuna 5 (@EDEComuna5) junio 23, 2014

A man walks by signs posted at the entrance of the Argentine Economy Ministry that read “Together we will fight against the loan shark vultures”  in Buenos Aires on July 29, 2014. (Victor R. Caivano/AP)

A man passes by posters on a wall against the “vulture funds” in Buenos Aires on June 18, 2014. (ALEJANDRO PAGNI/AFP/Getty Images)

From Reuters:

‘We are used to bad news,’ said 34-year-old office worker Mariano Garcia. ‘Every 10 years or so there is some cataclysmic event. It’s a shame.’

The sanguine reaction is a far cry from the chaos that erupted during the country’s economic crash in 2001-2002. Millions of Argentines lost their jobs, the economy collapsed and dozens of people were killed in protests that lasted months.

This time the government is solvent. The country’s commercial banks are solid, with low capital ratios, and Argentina still boasts a trade surplus, albeit a shrinking one, thanks in large part to high prices for soy.

How much pain the default inflicts on Latin America’s third-biggest economy will depend on how swiftly the government can extricate itself from the mess.

‘To go home carrying a default in their hands just doesn’t make sense,’ said Kathryn Rooney Vera, senior macroeconomic strategist at Bulltick Capital in Miami.

Argentines prepare for what may be the country's second default in the last 12 years. New York hedge funds who own Argentine bonds are demanding the country repay its debt by Wednesday. (Reuters)