My bank just tried to sell me their latest exploding financial product.
You get a 3 year bond from a major bank in Spain for 3%. Then the bank writes a CDS using that bond for another 1.5%. Woohoo! 4.5% yield on a 3 year A- bond!
(except for the tiny fact that in any restructuring, failure to pay or default will see you immediately lose 100% of your capital. You've just sold your rights for any recovery.)
The nice thing is that the sales guy pretty much admitted it was crap and that he was only flogging it for the commission.
I don't understand why banks are allowed to sell these things.