The following paragraph, which apparently is a common thing to report on and not given any special significance, is from the Wall St. Cheat Sheet article "Weekley Financial Biz Recap: . . . It makes one's blood run cold with fear and trepidation--$5 Trillion!!:
You can find the paragraph here
Goldman Sachs (NYSE:GS) and JPMorgan (NYSE:JPM)have sold CDS protection on more than $5T of debt around the globe. However, don’t expect to get detail on which it was that sold. The banks have hedged themselves perfectly, and are not likely to divulge how they did so, unless they suffer a run similar to what has occurred to Jefferies (NYSE:JEF). (Wall St. Cheat Sheet)
As balois on Seeking Alph comments:
Why are Obama, Geithner et al desperately urging the Europeans 'to get their house in order'?You can find the comment here
Because if one of the 'netted' CDS counterparties around the world seizes up and starts the infamous domino and, say, only a couple of percentages of those trillions of 'notional' suddenly become very real, the WS betting parlors are toast as toast can be.
And where are these trillions booked? Off balance sheet, of course. Only their +/- replacement values, deviously 'netted', are shown on the real thing. Derivative 'netting' is the mother of all deceptions to make these bucket shops look less ugly. (Comment on Seeking Alpha)