The trashing of Credit Default Swaps

Acting Man blog will be reporting more fully later today on what has occurred in the Greek CDS market, since the non-credit-event 50% haircut for banks on their Greek Bonds, read here with a chart. A quote:

Due to time constraints we will only be able to post a more elaborate update after the NY market closes today, but we wanted to quickly make a note on the 'Greek haircut' situation. As we pointed out yesterday, an amazing feat was accomplished by the negotiators: they got the banks to accept a 50% haircut on the Greek government debt they hold, and yet, it is officially not a 'default' – it isn't even a 'credit event'. This has had a massive effect on sovereign credit default swaps, which as of now can no longer be trusted as hedging instruments.

Update 1515 BST More reading and video.