Soros confuses CDS for Puts

The apparently attrocious payout scheme of a CDS that Soros illustrates is remarkably similar to (as in exactly the same as) that of a vanilla Put option. Should those be outlawed as well?
There is no doubt option volume has a "reflexive" effect on the underlying stocks as well. The reason for this, however (and Soros even points this out himself), is because dumb money eventually follows smart money and smart money likes smart instruments (derivatives) that they can tailor precisely to their views on any particular aspect of a firm. The fact that professionals are expressing their views (in CDS' case on "adverse developments" affecting an issuers' credit rating) only leads to greater market efficiency and quicker fair price discovery.
Companies don't fail because evil speculators shorted/wrote puts on their stock or bought protection on their bonds. They fail because their management fucked up.

clipped from www.guardian.co.uk "CDS are instruments of destruction which ought to be outlawed," Soros told a meeting of the Institute of International Finance. Going short on bonds by purchasing a CDS contract carried limited risk but almost unlimited profit potential. By contrast, selling CDSs offered limited profit and practically unlimited risk, Soros said. Soros said: "People buy a CDS not because they expect an eventual default but because they expect them to appreciate in response to adverse developments." "It's like buying life insurance on someone else's life and owning a license to kill," he concluded. He said derivatives should be standardised and saw no case for custom-made derivatives, which he said only increased the profit margins of the financiers who tailored them. Soros' criticism echoes fellow investor Warren Buffet's description of derivatives in 2003 as "financial weapons of mass destruction".