The bond market has been in rally mode, and that has driven down yields. Which has helped pave the way for the return of credit default swaps and collateralized debt obligations that invest in them. Bloomberg reports the markets are rising. In some quarters, these assets are reviled, synonymous with "financial weapons of mass destruction." But they perhaps do not deserve such scorn.

Credit default swaps can be seen as a legitimate way to hedge against bond holdings. To the extent that you find someone to take the other side of the trade, which isn't cheap, this is a legitimate endeavor, though one side of the deal will ultimately lose money. As for synthetic CDOs, I'd be interested to see how they are structured, described and rated. I doubt we're seeing a lot of synthetic CDOs investing in CDS linked to mortgage backed securities. Still, I'm sure the disclosure is more extensive.  

For more:
- here's the article

Related Articles:
Goldman Sachs ABACUS deal stokes controversy
Fears about banks rising again
New worry about the CDS market: Insider trading
How to unwind a CDS contract