In theory, credit default swaps are simply insurance against failed investments. In reality, these swaps can quickly get complicated. Tune in to this podcast from HowStuffWorks.com to hear Josh and Chuck demystify credit default swaps.
Josh and Chuck tackle the complex world of credit default swaps, those mysterious financial instruments that helped trigger the 2008 economic crisis. Using creative analogies involving health insurance policies and car accidents, they break down how these unregulated "insurance policies on debt" grew from zero to a staggering $62 trillion market in just over a decade. The hosts explore how these financial derivatives work, why they're so dangerous when unregulated, and how they contributed to major bank failures during the financial meltdown.
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