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@ftedit.ft.com

The trade in credit default swaps is surging as investors seek protection in the event the AI boom unravels. The insurance-like derivatives, which pay out if a company defaults on its debt, last rose to prominence during the 2008 financial crisis. Read the story on #FTEdit 👉 ft.trib.al/VAF717U

20/10/26, 9:34 am41 reposts80 likes

Teknopaul

@teknopaul.bsky.social

I worked in CDS at Deutsche Bank before the mortgage crisis. Allowing people to bet on failure by more than the amount they are exposed is a baaad idea. Banks have no idea what CDS are worth. Your best bet is to limit it by max value of exposure so people don't actively promote failures.

Teknopaul

@teknopaul.bsky.social

This is what they do for you and me, you can't insure your car twice.

Stevie W

@steviestevew.bsky.social

Good job nothing bad has ever come from this sort of thing, eh?

steveck63.bsky.social

@steveck63.bsky.social

How the filthy rich stay filthy.

Yash Jain

@earanyash.bsky.social

Oracle's CDS spreads already blew out this year on all the Stargate/OpenAI debt-funded capex. Feels like credit markets are pricing AI risk before equity does, not after. https://www.wortins.com/story/is-this-the-beginning-of-the-end-of-the-ai-stock-market-boom-90ff1282

Tom Russell

@kalleth.bsky.social

@edzitron.com so Nvidia is driving the AI bubble to take on more debt to buy stuff from them, and also rapidly ramping up its insurance of that debt because it doesn't believe it'll actually get paid? Am I reading this right?