On the last day of 2007 I wrote a post titled “CDSs: What Everybody Will Be Talking About In 2008”. And that seems to be coming to fruition.
As I wrote yesterday (Thursday), in a post summarizing the markets action “Today’s Trading Is About The Bond Insurers”.
So, if you want to understand the newest development in markets and one that is likely to stay with us this year as mortgage backed securities and CDOs last year you absolutely have to read two articles in today’s Wall Street Journal:
“Default Fears Unnerve Markets” (subscription required), The Wall Street Journal, January 18, 2008, A1
“Under Review: Ripple Effects Of Much Harsher Debt Ratings” (subscription required), The Wall Street Journal, January 18, C1
Also see this graphic “What is a credit default swap?”