when russia defaulted on its debt in august 1998 ltcm was holding a significant position in russian government bonds known by the acronym gko despite the loss of hundreds of millions of dollars per day ltcm s computer models recommended that it hold its positions 
ltcm s highly leveraged nature coupled with a financial crisis in russia led the hedge fund to sustain massive losses and be in danger of defaulting on its own loans this made it difficult for ltcm to cut its losses in its positions ltcm held huge positions totaling roughly 5 of the total global fixed income market and had borrowed massive amounts of money to finance these leveraged trades 4if ltcm had gone into default it would have triggered a global financial crisis due to the massive write offs its creditors would have had to make 