Greece and Credit Default Swaps: Bucking the ISDA Cartel

I saw an interesting article on CNBC where they were discussing the problem that the holders of the CDS contracts against Greek debt have, because of the fact that when the bonds are rolled over the original bonds that the contracts were written against cease to exist. As I understand it, if a Credit Event occurs due to a default, even though the bonds in question have lost a large chunk of their value. they still exist to be traded in the market. In the Greece scenario, the write down occurs, perhaps triggering a credit event, but the bonds that the CDS contracts were associated with have evaporated. The Greeks also instituted collective action clause, meaning even bond holders who are not a part of the deal will be forced into it. I guess these are the bond holders who are most at risk when the ISDA declares a Credit Event after March 9th.



http://www.cnbc.com/id/46592127



The nagging question is what credibility does a Credit Default Swap have if all types of maneuvers are being used in Greece's case in order to avoid the adverse impact of them? It seems the CDS as a valid instrument is itself at risk, because of this issue in Greece.
Read the Article at HuffingtonPost