Mandelman U. Presents: There’s Credit Default Swaps & then there’s Credit Default Swaps

In 1998, there were so few Credit Default Swaps in play that they were hardly worth counting. Not only were there a relatively small number of these credit derivatives being issued, but they essentially never paid off. That’s right. Issuing credit default swaps, at least as they were originally conceived and utilized, was risky like issuing flight insurance was risky.

So, what the heck happened to elevate credit default swaps to the status of global economy killer as they might rightfully be described today? Well, there are credit default swaps… and then there are credit default swaps.