One thing I don’t get is that the journalists and pols keep talking of the total CDS liability as though they could all go wrong at once to the tune of so many trillions of dollars? But aren’t a lot of the “bets” or hedges on opposite sides of the same potential event, so that when some have to pay out others benefit? I’m not saying there’s not a huge problem, I don’t know, but I keep hearing it described as though all of the CDS market could have to be paid off and that doesn’t seem plausible.
$10T of underlying real-estate mortgage market, "insured" by $62T of CDS. Makes one think, eh? And short-selling that accelerated financials downfall was against financial institutions that were leveraged with CDOs or CDSs themselves, not through CDSs directly.