actually i was scare to learn about CDS but the way you explained it was so easy to understand, thanks a million.KEEP THEM COMING we are paying close attention
"Hey wait, wait, wait, AIG. You only have 100 billion dollars in assets, but you have insured 1 trillion dollars of other people's debts!" Lmao I laughed so hard at this.
In the financial sector as a buyer do your research don’t go with the flow and do your own numbers and make your decision because somehow the lawyers found a way to diversify liability and at the end no one is at fault it is part of the game unfortunately
I'm doing research for an author and have needed to learn the entire sphere of the financial lexicon from scratch. This video is the best explanation on CDS's BY FAR that I have seen
You are as an investor, as a free-market participant. You are supposed to be a sane person - you either take into consideration Moody rating or disregard it. You are a private person making a decision with you money. When you make money it is your private profit, when you lose money it is your private loss. What is important that if something goes under, government and the FED are not supposed to step in and save your private losses with the taxes or inflation money.
watching this in 2022 and was watching the big short but I left it in the middle as I was confused so I ended up here xd I realised this vid was 11 years old that's why its in 240p lol
Sal....u are BRILLIANT! This was so clear. I totally understand CDS now. I have searched on the net for examples of what the heck they are...and you explained it so clearly here. Right...now onto the next video (I've watched about 5 today - they are addictive!)
Absolutely love the khanacademy. Just when I though derivatives exam seemed pretty impossible, it all of a sudden all makes sense. God bless this lectures ;) Can you come and teach at our University?
I have been in the fin markets since '73. I traded since 1987 in total OBIs so I got my scars. I have tried to explain it in layman's terms to my friends, found I had to back track often (and lost them in the story) but so far your C-D-1 made it clear to them. I will hit them tonite with C-D-2. Thanks for taking the work out of my hands.
Great job! Since, now even Greenspan admits that, markets are not self regulating. Who should we look to to set rules and regulations to govern these financial insturments?
thanks for this tutorial ! I have started to do research into how the banking/financial system operates & as soon as I came across the point if CDS's I felt like I was missing something - because it made very little common sense ! What I am seeing though, is that these systems are not based on common sense and what is best for all but rather what makes money for specific parties for limited amounts of time - no self-responsibility, no concern for the impact on others ! WTF?!
These videos are amazing. There's room for improvement in the aesthetics but other than that they're very eye opening. Thank you for sharing this knowledge for free.
Lol this is a productive day for me. First the awesome Matt Damon narrated documentary, Inside Job, the the big short and then these vids. I love knowledge. ;)
There are multiple issues with credit rating companies. 1. They rate the company situation at the present for a debt to be paid 10+ years from now; no commitments on any sides. 2. They are paid by the company being rated. 3. They have no liabilities if rating degrades over time. 4. A company's rating can be dramatically downgraded in 2 years from AAA to BB, for example.
Good explanation. Yet, do you agree about what some market commentators argue that unless there is a strict control of these credit derivatives what happened few years ago in 2007 may happen again?
What a great video explaining what I already knew but couldn't diagram out, thank you very much Sal, would love to be able to share this video on our TH-cam channel
If that is the structure, if I am Corp A or B with a low rating, I would just default entirely because I know that someone’s backing me up in case I default lol. If that’s the case, does it shift the liability from Pension fund to AIG?
Low interest rate is the problem. Now all these pensions can’t pay their obligations with interest income so they have to go out their ways to fund the payouts. No wonder Robert Kiyosaki wrote the book
You make it sound like the credit agencies couldn't do a good job. It is true they blew the MBS and CDO markets. However, they were quite accurate on ratings for everything else. Essentially, they had issues rating Mortgages and their derivatives mostly, due to the reasons you spoke about in your housing bubble section.
Simplest way to think it is buying a credit default swap is like insurance and you pay a monthly premium to the bank. In return the bank promises a payout if something happens, in this case thousands of mortgage backed securities failing and the banks payed out big time to the 3 big shorts.
so a credit default swap is an agreement/contract? and in the example used in this video the agreement is 10 years in this case so after 10 years the contract wears off? or is a credit default swap a product? is it an agreement or product? meaning if its a product, someone buys a credit default swap, can they sell it later on? lol
@quikesanjur We have lots of different levels: Social Security: US government provided, funded via special tax, available to everyone @ 65. (And due to be under-funded in a few years.) Pension: Provided by employers, sometimes a company, sometimes a state or local government. The money pool is managed by experts, following rules. 401k: Employer/Private co-op with special tax rules IRA (Investment Retirement Account): Private savings with special tax rules. Others too, plus your own svngs
came right here after watching big short
+Abhishek Rattan all over your keyboard??
+General Sarasota hahaha...... nah not literally :)
same bro
Thats a nice shirt. Do they make it for men?
Loool same
love how you dont waste time with unnecessary prologue and get right to the point!!
Not for nothing this is great. I needed this as I'm reading "The Big Short"
+Durandisse84 Durandisse I too came from The Big Shor
+Durandisse84 Durandisse Me 3
+Durandisse84 Durandisse same here
Same here!
Same here lol
Clearly understandable, very clear & precise! Love it! Just realized it was posted 15 yrs ago... truly an heritage!
Saw the Big Short, now I'm reading the book, and I needed this video to understand it! Thanks Sal!
This video was published at the perfect time
actually i was scare to learn about CDS but the way you explained it was so easy to understand, thanks a million.KEEP THEM COMING we are paying close attention
"Hey wait, wait, wait, AIG. You only have 100 billion dollars in assets, but you have insured 1 trillion dollars of other people's debts!"
Lmao I laughed so hard at this.
Wasn't as funny in 2008...
In the financial sector as a buyer do your research don’t go with the flow and do your own numbers and make your decision because somehow the lawyers found a way to diversify liability and at the end no one is at fault it is part of the game unfortunately
@@utubewatcher806 By his example AIG is leveraged at 10:1, but back in 2008 some banks were leveraged 30:1. Talk about insanity!!!
There's something shady going on...
fyi only...How MultiBank Group evolved into one of the largest online financial derivatives l.linklyhq.com/l/2JS #banking #finance #derivatives
I'm doing research for an author and have needed to learn the entire sphere of the financial lexicon from scratch. This video is the best explanation on CDS's BY FAR that I have seen
Sal,
You are so amazing! Thanks for making it easy to understand!
--ExcelIsFun
remember 13 years ago when people would sign off their youtube comments?
@@onion7568 : ) : ) : ) : ) : )
Well who the hell is rating Moody's ability to Rate!!!
+Durandisse84 Durandisse No one. Same with Standard and Poor's and Fitch.
Shareholders
Moody’s
You are as an investor, as a free-market participant. You are supposed to be a sane person - you either take into consideration Moody rating or disregard it. You are a private person making a decision with you money. When you make money it is your private profit, when you lose money it is your private loss. What is important that if something goes under, government and the FED are not supposed to step in and save your private losses with the taxes or inflation money.
The US SEC in the US, FCA in UK, SEBI in India; basically your national securities regulator.
2020here and still watching this right after watching big short. Gives me straight information regarding the principle of financial fiasco in 2008.
watching this in 2022 and was watching the big short but I left it in the middle as I was confused so I ended up here xd I realised this vid was 11 years old that's why its in 240p lol
Sal....u are BRILLIANT! This was so clear. I totally understand CDS now. I have searched on the net for examples of what the heck they are...and you explained it so clearly here. Right...now onto the next video (I've watched about 5 today - they are addictive!)
Aged like fine wine
This presentation was the most wonderful I have seen! so simple to understand. Thanks a lot!!!
Just watched "The big short", this is answered my question. Thank you!
Absolutely love the khanacademy. Just when I though derivatives exam seemed pretty impossible, it all of a sudden all makes sense. God bless this lectures ;) Can you come and teach at our University?
It's nice that this video was published right when the Financial Crisis happened 11 years ago.
I have been in the fin markets since '73. I traded since 1987 in total OBIs so I got my scars. I have tried to explain it in layman's terms to my friends, found I had to back track often (and lost them in the story) but so far your C-D-1 made it clear to them. I will hit them tonite with C-D-2. Thanks for taking the work out of my hands.
Wish these old videos can be enhanced of Quality. 14 years later still helping everyone. Thank you guys.
Great job! Since, now even Greenspan admits that, markets are not self regulating. Who should we look to to set rules and regulations to govern these financial insturments?
how ironic this was uploaded right in the midst of the housing market crash that's why im here
Thank you. Explained in a way I can understand how all this works.
This dude saved me in college for chemistry, Microbio etc. Is there no limits to his brain!?
I'll have to ask my wife :) I think she'd prefer that I stick to recording videos.
Your explanations are very interesting, pls keep on
EXCELLENT JOB!
this is how this stuff should be explained. dumbed without financial jargon thats meaningless to the layman. bravo.
Thank you so much!!!! Tomorrow I am writing a test and I didn´t get the whole thing about Credit Default Swaps... but now, it´s clear!!! Thanks!!!
This guy is great in teaching us these diffucult subject. Awesome!
I was surprised this video was made 13 years ago. My curiosity started to be solved thanks to that video
thanks for this tutorial !
I have started to do research into how the banking/financial system operates & as soon as I came across the point if CDS's I felt like I was missing something - because it made very little common sense !
What I am seeing though, is that these systems are not based on common sense and what is best for all but rather what makes money for specific parties for limited amounts of time - no self-responsibility, no concern for the impact on others ! WTF?!
"Pension fund.. Pension Fund.." love it!
You are one of the best teachers in the world
Holy shit, from 6:45 to 7:10 Nails it all together guys.... but you gotta be patient and watch from the begining
Great explanation. Thanks for freaking me out.
thanks, now I can get back to watching The Big Short and actually understand it.
Amazing clarification. Thank you very much for creating this.
I am so angry at those Insurance Companies!
Credit default swaps? More like "C'mon, this video rocks!" Thanks for another banger.
cant believe its 15 years old
Today I “got” The Big Short! 😍
Love you man... Subscribed
you make me understand the world man. thank you
I thought this video was great. Had no idea how CDS works but now I do. On top of that I also understand the massive risk with this! Thanks so much
I didn't know that Khan Academy was this old.
Khan academy is even older than that !
Awesome....Ive been trying to understand this and couldnt find any videos that made sense to me, but this video made sense. thanks
Nice explanation! It was easy to understand.
thanks so much. this is such a clear tutorial on what a CDS is..
outstanding!!!
Thanks Sal!!!
These videos are amazing. There's room for improvement in the aesthetics but other than that they're very eye opening. Thank you for sharing this knowledge for free.
Backhanded compliment!
Very useful tutorial. Clear and easy to understand. Keep it going.
Im just watching the big short right now, paused it to come here, thanks for making me feel like im not trying to read hieroglyphics!
Brilliant stuff. had been trying to find reading material on this but kept getting consfused. this is so good! thanks!
I like how you convey the context without exploiting their nastiness
Excellent! I never truly understood CDS's before this video.
Lol this is a productive day for me. First the awesome Matt Damon narrated documentary, Inside Job, the the big short and then these vids. I love knowledge. ;)
9:54 "you get insurance, you get insurance, everyone gets insurance!!!!!!"
Free online education. Must watch videos... Very Cool.
Unreal videos. Good work!
Credit Suisse CDS situation has me watching this.
I love and hate how complicated the financial world is
Thank you so much for that. I'm a dummy so I didn't get anything from wikipedia or investopedia. But your video cleared it in once. Thanks a lot!
You are a good teacher my friend
Wow, this helps a lot. This makes a lot more sense now.
There are multiple issues with credit rating companies. 1. They rate the company situation at the present for a debt to be paid 10+ years from now; no commitments on any sides. 2. They are paid by the company being rated. 3. They have no liabilities if rating degrades over time. 4. A company's rating can be dramatically downgraded in 2 years from AAA to BB, for example.
Best explanation hands down. Thank you
Excellent. Just excellent.
Learning finance from you makes it very easy. Thank you sir🙏
I'm always learning new terms in Wallstreetbets.
Excellent video, very clear now on what they are - I will watch your other videos! Thanks.
Fabulously explained. Thanks
You explain it so well
watching [the big short] now. good lecture.
imf/nato wealth theft taxation currency is an amazing subject! Article 1 Section 10
Good explanation. Yet, do you agree about what some market commentators argue that unless there is a strict control of these credit derivatives what happened few years ago in 2007 may happen again?
Great work on this video. You make everything so easy to understand.
What a great video explaining what I already knew but couldn't diagram out, thank you very much Sal, would love to be able to share this video on our TH-cam channel
If that is the structure, if I am Corp A or B with a low rating, I would just default entirely because I know that someone’s backing me up in case I default lol. If that’s the case, does it shift the liability from Pension fund to AIG?
Watch this years ago. But, this video is gonna get popular again in 9 month to a year
this is great. it totally help me to understand the credit default swaps.
Thanks dude much appreciated
Watching this exactly 16 years later - September 29, 2024.
Great video. Well explained..
Pretty awesome!! working for insurance company then u will get incredible bonuses.
the fact that this was posted in 2008, epic
Low interest rate is the problem. Now all these pensions can’t pay their obligations with interest income so they have to go out their ways to fund the payouts. No wonder Robert Kiyosaki wrote the book
nice explanation. constructive critisim: script it next time!
Best lessons ever!
Beautiful explanation
You make it sound like the credit agencies couldn't do a good job. It is true they blew the MBS and CDO markets. However, they were quite accurate on ratings for everything else. Essentially, they had issues rating Mortgages and their derivatives mostly, due to the reasons you spoke about in your housing bubble section.
This is very good and easy to understand
Me watching this video after the US Bonds Treasury deranks from AAA to AA+
Simplest way to think it is buying a credit default swap is like insurance and you pay a monthly premium to the bank. In return the bank promises a payout if something happens, in this case thousands of mortgage backed securities failing and the banks payed out big time to the 3 big shorts.
Khan academy thanks for yours videos
very helpful video.. help me finishing my term report. thank you ^_^
so a credit default swap is an agreement/contract? and in the example used in this video the agreement is 10 years in this case so after 10 years the contract wears off? or is a credit default swap a product? is it an agreement or product? meaning if its a product, someone buys a credit default swap, can they sell it later on? lol
"Let's say I'm a pension fund"
What the fuck is a pension fund?
First sentence and I'm already lost
banana aya playa just a fund that invests peoples pension money
Another excellent, simplified explanation. I ask myself sometimes how moody's can hold such incredible power of companies and underlying securities.
really clear and useful thank you
Thank you soooo much!!! I have a test tomorrow and this was the one thing I just could not get. I was so confused! (@,@)
Thanks for this. Great explanation!!
If you are a corporation that wants to borrow money, you have to hope that Moody's is in a good mood.
@quikesanjur We have lots of different levels:
Social Security: US government provided, funded via special tax, available to everyone @ 65. (And due to be under-funded in a few years.)
Pension: Provided by employers, sometimes a company, sometimes a state or local government. The money pool is managed by experts, following rules.
401k: Employer/Private co-op with special tax rules
IRA (Investment Retirement Account): Private savings with special tax rules.
Others too, plus your own svngs