This blog reproduces an e-mail exchange concerning the credit default swap (CDS). The gist of the e-mail was that the credit crunch is being driven by the CDS, that there had been wild speculation in the CDS instruments, that the credit crunch had been set up so that speculators could profit on these swaps, and that they should be regulated. More or less, a conspiracy theory. There are lots of these going around. Most are fantasies. The rest of this entry places the CDS into an insurance framework. It then goes on to my brief interpetation of how this credit … Continue reading Credit default swap and the story of the credit crunch