Danger signs

摘要

An Unusual thing happened this week in America. The prices of corporate bonds rose. Of late they have proved a dreadful investment—worse by far than government bonds. How much farther their prices will rise depends largely on what happens in the market in which they are priced: the swaps market. That market is in turmoil. Swaps are the glue that binds together the world's financial system. First developed in the early 1980s, they now dwarf other financial instruments. At the end of last year there were some $46 trillion of swaps outstanding, compared with $5.4 trillion in, for example, international bond markets.