Credit default swaps, or CDS. have taken on far more importance as they ought to. First, as a villain in the 2008 financial debacle. To this very day, protesters think they were the primary causes of the financial industry’s problem. Subsequent inquiries showed this not to be true.
And today, credit default swaps are not what they are professed to be, as a market indicator. It’s used as such by many professionals on Wall Street.
Studies show that relatively small volume make CDS quotes erratic. And too misleading when measuring risk, particularly when looking at financial institution risk. ( See the Earl J Weinreb NewsHole® comments.)
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