How to Test the Accuracy of the ABX

The WSJ takes a look at the notorious ABX today, and although it's more polite than me, it still shows how bad the index is as a gauge of the subprime mortgage market

Wachovia Capital Markets analysts Glenn Schultz and John McElravey say the price of the ABX that tracks AAA-rated mortgage debt implies losses of around 49% among pools of subprime mortgages issued in 2006. A cumulative loss of 49% would be achieved if all 2006 subprime mortgages were to default and recover only half their value after foreclosing on the homes, or if half were to default and recover nothing.
Most Wall Street analysts expect 10% to 15% in cumulative losses for these loans. As of August, the delinquency rate on all subprime loans was around 20%. For 2006 subprime mortgages, around 27% have already been paid down, many through refinancing, and 2% have defaulted.

The part of the article which interested me was this:

Critics say the relatively thin trading of the ABX on some days makes it prone to being moved by a few large trades. Much of the trading in the index also has leaned in the same direction. Banks use it to hedge against mortgage risk, and hedge funds use it to bet on further drops in housing; both trades tend to depress it.

As I understand it, anybody can make a bet on where the ABX will be in the future. But the ABX index isn't a security which goes down when a lot of people want to sell it and few people want to buy it: it's simply a reflection of where certain mortgage-backed CDS contracts are trading. In order for bets on the ABX to move the index, an arbitrageur would have to go out and go long the index while going short hedging by buying the underlying CDS.

Do such people exist? There's an easy way to tell: find a bunch of subprime CDS which aren't in the ABX index, and compare their prices to those of similar subprime CDS which are in the ABX index. If the anonymous critics are right and the ABX is being driven down by hedgers and speculators, you'll find a big diffence in price.

Has anybody done that?

Update: Alea emails to say that it's basically not possible to arbitrage the ABX against the underlying CDS.