By the end of 2007, the CDS market had a notional value of $45 trillion, of which the corporate bond, municipal bond, and structured investment vehicles market totaled less than $25 trillion. Therefore, a minimum of $20 trillion were speculative "bets" on the possibility of a credit event of a specific credit asset not owned by either party to the CDS contract.
As the market matured CDSs were increasingly used by investors wishing to bet for or against the likelihood that particular companies or portfolios would suffer financial difficulties; rather than to insure against bad debt -see above. The market size for Credit Default Swaps began to grow rapidly from 2003, by late 2007 it was approximately ten times as large as it had been four years previously. Wiki
How deep is the CDS hole? Aye, there's the rub. Nobody knows. Nobody in the general public knows how much of that $45 trillion is potential AIG debt of which the citizens of the United States are now the proprietors.
The "Financial Products Division" of AIG had around 350 people in it of a total AIG work forces of around 100,000. You see! You can make a difference as an individual!
The US government sensibly does not want to tell us how deep the hole is, who the holders of CDS from AIG are and what sort of plan the government has for dealing with an AIG CDS liability of 10, 20 or 30 TRILLION dollars if that is what it is. I can't imagine what such a plan would be…
I suspect that the USG does not want us to know that AIG CDS liabilities are massive beyond belief and that their distribution is close to universal.
Perhaps foreign policy is now irrelevant?