Toxic Derivative: Credit Default Swaps

Toxic Derivative: Credit Default Swaps: Toxic Derivative: Credit Default Swaps
Johns Wu Posted in Investing by Johns Wu
September 30, 2008 06:02 AM - 37 Comments

I’m surprised mainstream media does not talk about CDS (credit default swaps). CDSs are what crippled insurance giant AIG, and I think you will hear about this issue a lot more in the next few months… and it could get A LOT worse.

Derivatives are THE Problem
Deteriorating home values themselves aren’t to blame for the current crisis. It’s the exotic derivatives and mortgage backed secuirities financial engineers cooked up that are the problem. When you hear the talking heads on the news dropping terms like “leverage”, derivatives are what they are really referring to.