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Podcast: PRay TeLL, Dr. Hash
Episode: 1374 Credit Default Swap
Description: Credit Default Swaps, or CDSs, caused the 2008 Lehman Bros economic emergency. CDSs are one of the oft-referenced “derivatives” the financial system is so enamored with. Derivatives aren’t real investments, they’re bets on investments hiding under the guise of insurance but real insurance is a one-to-one ratio, where the payout is limited to the loss, but there can be an infinite number of CDSs issued on the same investment so the loss is multiplied a thousandfold, bankrupting the greedy bank that issued the CDSs under the intentionally naive impression that there was no risk. Of course, the salesmen who issued t...