Credit Default Swaps (CDS are Real Credit Ratings

Credit Default Swaps are insurance on U.S. Treasury bonds and notes and on other global government bonds,

Right now, for instance, the cost of such a so-called CDS on a five year U.S. bond is about 0.5%. The insurance, in other words, is that additional cost over the market level. Incidentally, early in 2009, the CDS was about 1% over prevailing rates for the five-year Treasury bond.

In practical ways, Credit Default Swaps are actually credit ratings and are useful in the current debt emergency.( See the Earl J. Weinreb NewsHole® comments.)