Argentina faces default on Thursday at midnight if the government and vulture funds from the 2001 default don’t reach a deal.

At this point, the sides aren’t even directly talking and virtually no expects a deal through mediators before time runs out. Argentina has refused to pay holdouts for more than a decade but that plan was complicated this year when US courts ruled that Argentina govt money couldn’t pass through the US financial system until holdouts were paid.

That makes it virtually impossible to pay holders of new bonds. In addition, a clause in post-default bonds guarantees them a better deal of holdouts are paid before Dec 31, 2014.

This one is a really tough call and there are only two options left: delay or default.

Both sides could ask for an extension of talks and the government will probably try that tactic but Bloomberg reports that two of the vulture funds might not be receptive.

Elliott, a New York-based hedge fund that sued for better terms than previous debt swaps, has said it would support a way for Argentina to continue making bond payments only after making progress in talks. Aurelius Capital Management LP, a hedge fund that sued alongside Elliott, has said the country is “wholly undeserving of another stay.”

There are some options were Argentina could try to swap foreign debt into local debt but it would be a messy and time is short. Some kind of technical default is growing more likely. The benchmark Merval index is down 11% since July 14 (which was also the first trading day after Argentina lost the World Cup final).

If the country opts for default it will get much worse and could put a strain on emerging market bond funds, potentially putting a strain on the system and spilling across Argentina’s borders.