Tag credit default swaps

From Fortune The dollar amount of credit default swaps is greater than the world’s economic output. They started out being a way to buy insurance against debt default. But even this was sleazy. Only insurance companies can legally sell insurance.…

Credit default swaps are, in effect, insurance on bonds. The seller pays the buyer a fee, the buyer agrees to pay if a default happens. However, this market is so unregulated and CDS get re-sold so often that the original…