If there's been one benefit of the financial crisis, it's the improvement in financial literacy. People are now paying attention to ratings, interest rates, and Fedspeak. Even credit-default swaps, at whatever level of understanding , are fair game for dinner-time conversation.
The recession has even brought into question the bedrock of finance theory: efficient markets, or the idea that market prices reflect all available information. One professor at the Solvay Brussels School of Economics confesses that the CDS market is "opaque, often illiquid, and prone to manipulation." This leads to share price pressure and a bundle of screwy signals to both rating agencies and short sellers. Alas, the markets are mostly efficient, and certain anomalies are worth exploiting. Just don't try to argue with your business school professor about this.
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