The tail that wags the dog

Lawmakers keen to expose examples of how speculators can move government bond markets by manipulating derivatives prices could do worse than look at the emerging markets, where sovereign CDS activity is more widespread and longstanding than in developed markets. But they might not find the smoking gun they are looking for.

Hungary's parliament building

Days before the start of the football World Cup, Hungary’s new governing party scored a spectacular own goal. Exaggerating the failings of the old administration, apparently for domestic political gain, two senior officials insisted the country was facing a Greek-style debt crisis and warned a default was not out of the question. By June 5, an outpouring of sceptical comment from analysts and economists had forced the government to admit it was hyping the problem – although not before the euro