Comments on: Untangling Credit Default Swaps

By: utewb11

utewb11 — Thu, 01 Oct 2009 17:52:38 +0000

Best explanation so far….thank you

By: rdnavarre

rdnavarre — Thu, 01 Oct 2009 17:04:07 +0000

Absolutely EXCELLENT video!!!

By: learnanddeliver

learnanddeliver — Thu, 01 Oct 2009 16:42:19 +0000

Thank you, excellent analogy and explanation

By: Eyunbin

Eyunbin — Thu, 01 Oct 2009 16:18:27 +0000

what I think is… Jim needs to pay the difference to Sam. the collateral is only an protection for Sam when Jim is down rated or even default. I’m not quite sure… do varify me

By: fukinh0t

fukinh0t — Thu, 01 Oct 2009 15:57:57 +0000

So then the credit default swap is only insuring up to the collateral and not the full amount os the loss?

By: lateralexrex

lateralexrex — Thu, 01 Oct 2009 15:07:11 +0000

500k. The collateral is still Jim’s, it’s just to demonstrate that he will be able to cover his debts.

By: fukinh0t

fukinh0t — Thu, 01 Oct 2009 14:44:11 +0000

I need someone to help clarify a part. In the example, Jim has to put 500k collateral. So if the 5 million investment goes down to 4 million, will Jim have to pay the 1 million difference or will it only pay 500k?

By: FA9082

FA9082 — Thu, 01 Oct 2009 14:16:45 +0000

Very comprehensive video, thank you for the service.

By: oesterle6

oesterle6 — Thu, 01 Oct 2009 14:08:22 +0000

Thank you, Thank you! I finally get what happened. Even CNBC didn’t explain it so clearly in their layperson specials.

By: jerseyjack

jerseyjack — Thu, 01 Oct 2009 13:38:43 +0000

cds IS insuring the entire risk 500k is just the collateral. The entire amount is supposed to be paid back in order to make the insured “whole”. Companies like AIG were taking on more than they could handle. When large corps like GM go south they may or may not be able to cover everyone’s losses. When they are forced to go public no one knows if they’ll be made whole or not…thus causing a panic. I’m not an expert…but that seems to be the case to me.