As usual, 60 Minutes did an excellent job of covering this complicated story and explaining it so even someone like me could understand the basics of it.
Pretty scary stuff.
reese
My guess is if we employed this much ingenuity to something useful, we would have cured the common cold years ago. Gesundheit" and thank you Patti for the insights!
Opinionator
WHile this is a good job in describing how a CDS works it does little to describe how they led to the downfall of the financial community. Essentially, it worked like this- the CDS was an insurance policy that I took out on your house. I never made unless your house burned down. Hence, I had an incentive to burn down your house. Guess what I did? Yep, carried gasoline and matches every single time I went near your house.
Parlaying this to the finance community, it led to downgrades by the CDS holder of the other institutions. It led to shorting of the other institutions in order to benefit. In hindsight, the financials created their own demise.
