[Toddsterpatriot]

If you have enough CDS's, more than the value of IBM, you could do lots of things to make IBM fail.

For example?

For the case of CDS's on MBS's, you just wait for the next recession.

Sounds easy. Makes you wonder why anyone would sell a CDS, seeing as you think it's a guaranteed winner.

[PapaBear3625]

Sounds easy. Makes you wonder why anyone would sell a CDS, seeing as you think it's a guaranteed winner.

It's a winner as long as you can defer the day of reckoning to the point where the problem is so big that a government bailout is required to avoid a total collapse.

Something like the S&L crisis. People were making lots of money right up to the point of systemic failure.

[palmer]

Makes you wonder why anyone would sell a CDS

profit: http://www.financialsense.com/fsu/editorials/amerman/2008/0917.html

That and the political appointee of the now disgraced former governor of New York said it was ok to do it.