Bring in the sheep, credit default swap futures available to public


Trading in credit default swap futures starts in May, no doubt hoping to lure retail investors into an arcane world that supposed pros sometimes don’t understand.

Even more intriguingly  the index won’t be determined until the final settlement day, which implies traders will have no freaking clue what their trade is worth until the final day AND “futures would reference a version of the index that would strip out any defaulted names,” which I leave as an exercise to the reader to understand*.

Wall Street’s “solutions” to problems caused by bewilderingly complex trading mechanisms is always to make them more opaque and convoluted and then try to offload the risk on the unsuspecting public.

We look forward to options on credit default swap futures which are based on an index that changes by mysterious rules and where the underlying financial instruments are in themselves difficult to understand forms of pseudo-insurance. I mean, what could go wrong with that?

* I’m guessing that hedge funds and investment banks have already figured out how to game the index.


  1. Yep, our economic system is based on fantasy. Our fiscal system is on the verge of hyper-inflating. Our government has repealed the 800-year-old right of habeus corpus, has made spying on its people commonplace, and has opened the door for killing its own people within its own borders using unmanned drones, without our Constitution’s guaranteed due process. So, perhaps it is fortunate that the state itself is being hollowed out and is on the verge of collapse.

    Any way you look at it, it’s time to stop fantasizing about resilient communities, and start building them. Start where you live. Your survival depends on it.

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