Is the CDS market the next black hole?

Thanks to Bill Gross, Pimco's famed bond fund manager, the idea that the credit default swaps market could blow up is floating around. He noted this week that new systemic risks from CDS might crop up. Until now, the market has been a home run for Wall Street--the market took off so powerfully, the back offices couldn't keep up. CDSs are now a staple of the derivative world. Fortunately, we've experienced few outright corporate defaults, but the Financial Times notes that could change, and if it does a lot of holders will be wondering if they are going to get paid by counterparties. This raises the question of who, exactly, the counterparties are. They could be people on the other side of trades or they could be the market makers. But if defaults run high, someone will have to pay.  

For more:
- here's the Financial Times article