asked Felix Salmon a question in a comment at Market Movers.
He just responded by AIM (hey does that mean I’m on Felix Salmon’s AIM friends list ? sure does and all I had to do was download and install AIM).
felixsalmon (8:31:29 PM): But I’m interested in a comment you left on my blog:
felixsalmon (8:31:35 PM): “Now as to CDS abuse, tell me a non abuse involving way in which the notional value of CDS is so much greater than the value of all insured D ? If something like that happened with another kind of insurance, wouldn’t you consider it abuse?”
felixsalmon (8:32:18 PM): I think I can answer that quite easily: I enter into a position, and then I unwind it by entering into an equal and opposite position
felixsalmon (8:32:28 PM): and since I’m a trader, I do that many times a day.
felixsalmon (8:32:45 PM): Pretty soon, notional is through the roof, even with no net exposure at all
email@example.com (8:33:02 PM): yes that seems to be an answer (and indeed quite easy).