As a result of investigative television reporting (e.g., 60 Minutes) and mainstream publications (e.g., Time), people are recognizing the volatile and widespread practice of “Credit Default Swap” transactions. The latest estimate I’m aware of is that the U. S. economy has 60 trillion dollars linked to these investments.
The most troubling aspect is that the nature of these transactions places them beyond regulation and that this was purposeful (ouch).
Credit Default Swaps: The Next Crisis?
By Janet Morrissey Monday, Mar. 17, 2008
Credit default swaps, once an obscure financial instrument for banks and bondholders, could soon become the eye of the credit hurricane. Fun, huh?