Credit Default Swaps Explained

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Uploaded by on Sep 19, 2008

Thompson Financial on Credit Default Swaps.

http://www.youtube.com/user/ThomsonFinancial

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  • Credit Default Swaps = financial fire insurance. How to game it: overvalue the value of your holdings (what you are insuring) then default (arson). It is like taking out a lot of fire insurance then burning down your house to collect more than it is actually worth.

  • he looks like robot....lol

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  • He is reading...

  • "I Can't Believe It's Not Insurance !" As far as I know, CDS differs from ordinary insurance in 2 ways, as follows : 1. No regulation of reserve requirements, which is why AIG couldn't pay out & 2. Moral Hazard. You can insure someone else's interest e.g. if I take out insurance on your life, it just might be in my interest for you to not be around for much longer !

  • @hajispecialist I agree with what you said! The Corrupt US Govt is TRUE! With only those who were in CHARGE at the Time! Senators Gramm-Leach-Bliley (R)! The Act of 1999!) This Act allowed for Unregulated Trades,and Proibited SEC, FDIC, FedReserve Bank Regulators from Auditing, Investigations! This is why we had the "Global Meltdown!"

  • Actually it's more like making a bet that you're friends house will burn in a fire and collecting when it does.

  • can you arbitraily OVER-value your holdings ?

    Nest, arson is a crime, so the arsonist may not coolect the insurance payout

  • reported on NPR 10/4/08 on This American Life that for the taxpayers to purchase this huge, stinking pile of garbage assets and get nothing in return is certainly possible.

    However, someone in both Sen and House has added language to the bailout bill to give the Treasury Secretary the OPTION of requiring stock in the failed banks, along with the worthless assets.

    Sort of like yes, we'll buy your bad debts, but we also get a share of your business.

    Q: How do we force them to do this now?

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