Since these political factors were missing from the economic models, the economists did not assign the correct probability to a Russian default.

Then, particularly after the Russian default, those same investors stampeded out.

The value of debt issued by governments and companies in emerging markets has risen steadily and sharply since the Russian default.

After the Russian default, easy money could be made by buying almost anything in that bucket.

In 1998, the party was abruptly ended by the Asian financial crisis and the Russian default.

Some explanations for financial contagion, especially after the Russian default in 1998, are based on changes in investor "psychology", "attitude" and "behavior".

The flows are still positive, but because of the Russian default and the other events that rocked the world financial system, people backed off.

The shock waves from the Russian default were felt around the world, partly because they shattered the assumption of an international safety net.

A Russian default on foreign loans would make it that much harder for many years to come for a cash-starved Russia to receive credits.

"We've only seen spreads this wide for a short time, during the Russian default and the hedge fund debacle of last year," Mr. Penniman said.