Exactly, I never understood the concept of Credit Default Swaps, it would be like me buying fire insurance on my neighbor’s house and multiple other people doing the something, resulting in the house being insured for multiple times it’s worth.
I guess the assumption is no one defaults on their sovereign debts so why not sell the CDSs since no one defaults the payouts will never happen, until they do and all hell breaks loose.
Perhaps a better example, Mel Brooks and ‘The Producers?’
They designed something that could not possibly succeed, until it did.
I appreciate reading all of these insights. I do not understand the emotions. I suppose it is because I do not have a dog in this Hunt.