Joe: We’re both broke.
Sue: Let’s each loan each other $100. You can spend your $100 since you know I owe you $100. I can spend mine since I know you owe me.
Joe: Cool. What should we call this so people take us seriously?
Sue: Something stuffy and official so it sounds legit.
Joe: How about “Credit Default Swap?” We’re swapping credit.
Sue: CDS for short.
Joe: Great. Now we’re not broke anymore, at least until other people find out what we’re doing.
Sue: That’ll never happen.
CDS is really happening around the world. Somehow we all owe each other billions of dollars. Don’t say you didn’t see the end of the game coming.
