Chart of the Day

Err wrong chart ...

Hehe, here you go ... Something from the fine folks at the New York Times.

Wow!

The thing to keep in mind though is that a credit default swap is NOT a security, it's simply a derivative based off a notional value. So that big $45.5 trillion is not a hard dollar value; au contraire, the size of the stock market is indeed a hard dollar valuation. Also, being swap contracts, many of the these derivatives offset each other. This is where I think the New York Times has the above graph slightly misleading.

Sure, you'd probably never buy or sell credit default swaps in your portfolio, but its still an interesting tidbit to know ...

To read more on Credit Default Swaps, you can check out this white paper from JP Morgan. Slightly old, but still relevant.