Equity v credit derivatives showdown: Difference between revisions

The product emerged in the 1990s, became highly fashionable, by 2003 had earned its own definitions booklet, and as the [[CDO]] mania of the noughties reached fever pitch, it began to standardise. Legions of chancers, grifters and joiner-inners flooded the market and before you knew it there were all kinds of “exotic” structures, each more convoluted and less plausible than the last. Growth was periodically set back by actual credit events in the market, each it's own life lesson about the multifarious ways in which over-engineered, too-clever-by-half structured products can surprise their Inventors by finding unexpected ways to fail.  The real “come-to-Jesus” moment for credit derivatives was the [[credit crunch]] of 2007 and then 2008’s full blown [[global financial crisis]],  which between them revealed the degree to which nice ideas in theory don’t hold up in the sweaty throes of market panic.  There was a ''lot'' of litigation about misfiring — or allegedly misfiring — credit derivatives.