In a show of how some disagree with the price, many are noticing the prices of CDSs. Consider the Guardians story, Calls to curb CDS gamblers as Greek crisis continues (http://www.guardian.co.uk/business/2010/feb/15/credit-default-swaps-regulation).
I agree that illiquid markets do not render accurate market data all the time but is it possible the odds of default are greater than most believe? If hedge funds are over-paying for CDSs, don't you think Goldman or JP Morgan would offer them as many as they want?
I do agree that this crap should be regulated. As a clearing member at a futures exchange, I can only think of one legitimate reason it isn't: those making all the money set the rules. It's similar to corporate bond trading before the TRACE was put in place. Markets with informational disadvantages assure those in the know will pick off someone on the other side for a tidy profit. It's time regulators clean this up.
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