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Roundup: Explaining Financial News in Pokemon Cards
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Jason Kottke shares a great explanation of the financial crisis using Pokemon cards. What’s also missing is the part about how the bank then took the card and used that as collateral for “insurance” (a CDS, which doesn’t have the same capital requirements as true “insurance”)… now you have a more accurate picture of the financial disaster. (Oh yeah, and people aren’t lending anymore because no one trusts anyone anymore)
EcoModder points out a nice little perk/pork that was added to the bailout package that recently passed: Bailout Plan Gives Tax Break to Bicycle Commuters. I bike from my bedroom to my office, I wonder if I qualify.
Nickel writes about how looking at the stock market indices can be deceptive – if you continue investing through down periods, you end up ahead even before indices recover because of how dollar cost averaging works out. Flexo shares his experience with buying dips in the market.
Want another money comparison between John McCain and Barack Obama? SVB offers up a comparison.
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Hmm, I think that’s really the worst explanation of the crisis I’ve heard yet.
And dude, I think you meant CDS when you said “a CDO, which doesn’t have the same capital requirements as true “insurance””.
BUT a CDO is not an insurance product. It IS a credit derivative. It does not act like insurance. That would be a credit default swap – CDS. And since I’m on a tear having to explain this misconception tonight, read this first. Don’t worry, I’ll wait.
http://bit.ly/3QuOgi
Done? Cool. Credit default swaps act(ed) like insurance on reference credits – bonds, CDOs, RMBS, CMBS, etc.
Hope we’ve cleared up that misconception. Let’s use the right terms in the right ways, as it serves no one to mislead them (unintentionally or intentionally).
Khyron: I think it’s a great explanation given the level of understanding required by the average Joe… you’re right I mean CDS, not CDO… I just got my acronyms mixed up.