Credit Default Swaps
In eConned, Yves Smith argues that credit default swaps were/are used to take out insurance-like contracts against financial products in which buyers had no insurable interest. This was related to the financial crisis of 2008 because hedge funds and others allegedly helped produce bad subprime mortgages on purpose so that they could buy insurance on them, and then profit when the home buyers failed to make payments.
Read more about this topic: Insurable Interest
Famous quotes containing the words credit, default and/or swaps:
“In a secular age, an authentic miracle must purport to be a hoax, in order to gain credit in the world.”
—Angela Carter (1940–1992)
“In default of inexhaustible happiness, eternal suffering would at least give us a destiny. But we do not even have that consolation, and our worst agonies come to an end one day.”
—Albert Camus (1913–1960)
“When you got to the table you couldn’t go right to eating, but you had to wait for the widow to tuck down her head and grumble a little over the victuals, though there warn’t really anything the matter with them. That is, nothing only everything was cooked by itself. In a barrel of odds and ends it is different; things get mixed up, and the juice kind of swaps around, and the things go better.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)