Was reading Traders, Guns & Money over the break - fantastic book, BTW - and was struck by the anecdote regarding the Korean crisis. In a nutshell, because of all the CDS written against Korean-denominated assets, Korean bonds actually went into a bull market during the Asian crisis even as the economy was collapsing around Seoul's ears. This was because the CDS specified payment delivery in Korean gov't bonds, and the volume of CDS was such that the demand for the bonds was several multiples of the available supply. (Insert obligatory "quants can't add" joke here) I can't even begin to imagine the aggregate volume of Treasury bills, notes and bonds pledged in the CDS market. It must be an astronomical number - does anybody actually know? Because watching the historically-wide increase in US sovereign debt CDS spreads - and the collapse of well-known names into junk bond status and threatening default - has me wondering if perhaps some of the insane buying pressure we've seen in Treasuries is due to a similar effect. A related question - is there any published ruling/opinion on how accessing TARP relates to the "standard" default provisions in the "standard" swap contracts? EG, what does GM or GMAC actually have to do to trigger a CDS-applicable "event", and if it happens under TARP, does it become a "tree falling in an empty forest" situation? Let me reiterate the thumbs-up for Satyajit's book - it helped click several floating pieces into the larger puzzle.