What's wrong about CDS

Discussion in 'Wall St. News' started by belmondo, Oct 6, 2008.

  1. belmondo


    Since I'm not a english native speaker, could anyone explain me why everybody blame CDS? what's wrong with them?
    or send a link where is explanations (understandable english)
    thank you very much
  2. Credit Default Swaps are actually [supposedly] insurance against default. If they'd been named as "insurance", and regulated as such..... the premium sellers would have had to post reserves to honor their future potential obligations.

    As they were named "Swaps" rather than "Insurance", no such reserves were posted.

    Regardless of what they're called, they had no more substance than "smoke and mirrors"...