> it's become well-known that there are hundreds of trillions
> of dollars of credit derivatives out there, many times the
> annual value of global economic output. I have some inkling
> of what this means but I'm not entirely sure. Does this figure
> refer to the gross value of transactions in credit derivatives
> (or the value of transactions in still outstanding credit
> derivatives, i.e. insurance policies that have yet to be
> paid out?).
Here's a decent summary of the question and some numbers; read this and come back with more questions if it's too technical.
http://zerohedge.blogspot.com:80/2009/02/some-more-facts-about-how-cds-market.html