Michael Burleigh
Any Answers
Wednesday 16th July 2008
I can't seem to get my mind around something called Credit Default Swaps, which apparently are very much a part of the credit crunch. I tried to concentrate hard on a TV report that explained them, but at a crucial point I lost the thread of the explanation. Is it insuring mortgage default and then selling this on? Probably not. Any help from a passing hedge fund millionaire would be deeply appreciated, a sentence filled with ambiguities!
9:01 am
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COMMENTS
Duck
July 17th, 2008
1:07 AM
1:07 AM
Captain B
It's just a bet. A hedge. Insurance. One party sells an insurance policy on the credit of an issuer. If the issuer defaults on its bonds the seller of the swap pays out some amount of money to the buyer. The policy is tradeable in a secondary market.
mburleigh
July 17th, 2008
5:07 PM
5:07 PM
Its becoming clearer. Can you do this with mortage debt?
