Credit Default Swaps is a system whereby speculators can insure against the prospect of government's "defaults". The 'scam' is you don't have to be a stakeholder to insure. So speculators are currently buying and selling CDS's in the Greek Government. At present, American banks stand to make £62 billion if the Greek government defaults on its loans. Thus it is in the interest of these banks for the Greek government to go bankrupt as they will make a great deal of money out of it. This is the equivalent of allowing an arsonist to take out an insurance policy against some else's property that he/she plans to set fire to!
What a system, where banks can make money by betting on a country going bankrupt. A country, like Greece, where a USA-inspired austerity programme has meant: -
- 15% to 30% cut in public sector wages
- a rise in VAT, for many products, from 13% to 25%
- an introduction of a 1% to 5% household tax on all household incomes
- the close of 2,000 schools
- wholesale privatisation
It's nice to know that someone, somewhere, stands to make £62 billion profit from a country going bust and the resultant suffering of its people.