Has the credit default swaps (CDS) market started to unravel?
Not as such. They are a big cloud over the financial sector. So far, the CDS market has been all right. The governments are also trying to do something about that. A lot of experts are now blaming Alan Greenspan and the low-interest rate regime that he run in the aftermath of the dotcom bubble burst for fuelling the entire credit crisis. Isn’t this more a benefit of hindsight? Yes. They do that with the benefit of hindsight. It’s sort of a complicated issue and it’s too early to blame one particular person for it. Also how much do you think are China and other Asian nations responsible for fuelling the credit crisis because of the fact that they were more than happy to buy the US Treasury at low-interest rates? Yes they are. China has over $2 trillion of foreign reserves. This is clear evidence that while the US saves too little, China is saving too much. And a lot of it is used up to buy securities issued by the US government, which ensured that interest rates continued to be low and
