Wise Man Say... 08.05

CDOs in a nutshell...

Untangling Credit Default Swaps

Credit Default Swaps are sort of the nuclear power of the finance world. They have the potential to be a cheap source of enormous energy but when they go bust, you get this: the financial world's version of Chernobyl:

Untangling credit default swaps from Marketplace on Vimeo.

Uncorking CDOs

Here is a second video from Marketplace that does a pretty good job of explaining the arcane world of Collateralized Debt Obligations or CDOs:

Crisis explainer: Uncorking CDOs from Marketplace on Vimeo.

The Credit Crisis Explained

I came across these videos from Marketplace that are perhaps the clearest, simplest illustrations of the credit / financial conflagration that started on Wall Street and has now spread around the world. I never actually thought that there was any easy way to explain credit default swaps or CDOs but these guys do a pretty damn good job of it. This is the first video:

 

The Credit Crisis as an Atlantic Expedition

The credit crisis as Antarctic expedition from Marketplace on Vimeo.

Party like it's 1999

Just so everyone remembers, exactly nine years ago is when this whole merry-go-around started:

FANNIE MAE EASES CREDIT TO AID MORTGAGE LENDING

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

   - New York Times, Sept. 30, 1999.