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Alex Trias - - -
Nov 28 13:47 pm
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All Comments by John Lounsbury »The CDS Anti-Matter Bubble [View article]
One important factor you fail to mention in the rapid rise in CDS prices is the reluctance of new writers (issuers of CDS). If the supply diminishes with a rise (or even no change) in demand, the price rises. When isssuing and selling a CDS was considered a low risk action, there was plentiful supply. When a major issuer goes belly-up (Lehman) the supply of new instruments dries up (risk recognition).