Default Fears Start to Shake Investors
FrumForum
June 1, 2011
As Steve Bell, the Senior Director on Economic Policy at the Bipartisan Policy Center, has argued on FrumForum, it is important to keep an eye on the spreads for credit default swaps (CDS). These complicated financial derivatives are essentially default insurance policies for creditors, except that third-party speculators can jump in and bet against the debtor. The spread is the quarterly premium paid by the buyer of the swap.
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Infographic
Based on the housing industry’s average share of Gross Domestic Product (GDP) from 1980 to 2007, the infographic illustrates that 2.3 percent or $350 billion is “missing” in potential growth.
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