Videos: Credit Default Swaps – the next crisis?

These two videos attracted my interest. Have you heard of Credit Default Swaps? If not, read (watch) on…

Part 2.

There’s more on Wikipedia, too. So what is a Credit Default Swap?

"A credit default swap (CDS) is a credit derivative contract between two counterparties, whereby one makes periodic payments to the other and receives the promise of a payoff if a third party defaults. The former party receives credit protection and is said to be the "buyer" while the other party provides credit protection and is said to be the "seller". The third party is known as the "reference entity".

When a credit event in the reference entity is triggered, the protection seller either takes delivery of the defaulted bond for the par value (physical settlement) or pays the protection buyer the difference between the par value and recovery amount of the bond (cash settlement). Simply, the risk of default is transferred from the buyer to the seller.

For example, ABC Corporation may have its credit default swaps currently trading at 265 basis points (bp). In other words, the annual cost to insure 10 million euros of its debt would be 265,000 euros. If the same CDS had been trading at 7 bp a year before, it would indicate that markets now view ABC as facing a greater risk of default on its obligations.

Credit default swaps resemble an insurance policy, as they can be used by debt owners to hedge, or insure against credit events (such as a default) on a credit asset. However, because there is no requirement to actually hold any asset or suffer a loss, credit default swaps can also be used for speculative purposes."

This is interesting stuff, how have we built such a house of cards? …

Carnival of Making REAL Money Issue #21 on August 1st, 2008

These articles are presented for the Carnival of Making REAL Money edition for August 1st, 2008. Because there are only a few articles for this edition, I’ve only organized a few categories! Thank you for your excellent submissions and keep them coming! Summer time is no time to forget about personal finance, that’s for sure!

Personal Finance

Online Earnings


CALL for Submissions

I’m definitely looking for articles that are readable, inspiring, and well-written for readers who may or may not have much investing or financial knowledge. Articles will cover making money in the real world, as well as online; being in business; making investments; making money through smart decisions; and aspects of personal finance, etc.. It is NOT about dieting, surveys, drugs, selling things, what you ate last night or any of a myriad of irrelevant topics. If you are not sure what is accepted, read the previous carnivals. It seems that a number of people don’t bother to follow the policy… As such, …

  • Your article must be original and previously unpublished in this carnival. I like to maintain a variety of sources and topics, I will only accept one article per person per blog. — If you submit MORE THAN TWO articles to any edition of this carnival, ALL your submissions will be eliminated without hesitation. Repeated multiple submissions to this carnival will mean that your articles and/or your behavior are spam-enough to blacklist your blog from this carnival.
  • In short, submit ONE article from one blog once only.
  • Spam: Articles must be unique, ideally hosted on a full-blog (ideally not on a subdomain of blogspot, blogger, etc.). If you are serious about your blog, then find a real blog host on a real domain.
  • Comments MUST be enabled on any post submitted to the carnival and registration must NOT be required: I’m hoping that we generate interest in the submissions and that traffic generates comments. Let’s not frustrate our readers.
  • Please, do include a comment about your article for your readers. Even if it’s just a few words, it will help me to know that your article is not a spam submission!
  • Additional reasons for not inclusion: popup/popover/popunder windows, URLs that time-out, missing articles or moved pages, articles that make NO sense, any music/tracks/voice-overs that auto-play, articles that REQUIRE registration before reading and/or commenting.
  • All editorial decisions are final. If you wish to know why I didn’t accept your original entry, please contact me via the contact form.

In short, I run this blog carnival in my free time, I receive no money for this activity, so I’d appreciate as much consideration as possible. It would be nice if you acknowledge the blog carnival somewhere on your website! Anywhere, it doesn’t matter: in a post, in the post you submitted, in the blogroll, etc.. or you can do a separate post when the post is published. This helps to drive traffic to the carnival, where people can find your posts!

In short, thank you for taking the time to consider submitting ana rticle

Best Wishes

Kenneth from Carnival of Making REAL Money

How Do Bloggers Use Their Credit Cards? Read on…

Ages ago, I posted a reply to a request from Mr. Credit Card’s survey. I’d forgotten all about the survey until I received this email announcing his results: It’s worth reading, and great link bait. As is his follow up post on the bloggers involved!

Mr Credit Card here.

During March and April, I sent out an email to do a credit card survey. In fact, I sent out to over 150 pf bloggers. 45 of you have responded to the survey and I want to thank all of you for that.

But first, I want to apologize for taking so long to publish the results. There were several reasons. Firstly, I sent a few reminders to the people I sent the survey to and this took a while. Then, when I upgraded to WordPress 2.5.1, I could not load any images (and I had to for this survey). My full-time work also got in the way.

Having said all that, I have published the results. I want to thank you all once again. In return for participating in this survey, I will mention your blogs in a special post tomorrow (hint : it’s not just a post full of links).

So watch out for my emails again tomorrow. And I hope you learnt something from this survey.

Regards – Mr Credit Card


As a way of saying thank you to all of you, I have actually written a follow post that briefly describes you and your site and I’ve picked what I thought to be the best or most interesting credit card post you have written on your blog. I’ve named the post “Ultimate Collection of Credit Card Posts” – (well, maybe I’m exaggerating, but hey – it’s all of your post!).

Thanks once again. And I would appreciate if you could spread the word about the survey and the collection of cc posts. I’ve certainly learnt a lot from this and I might just write up my thoughts on how we could collectively make better use of our cc in a post tomorrow.

So watch your emails again!

Regards, etc..

If you’re interested, check out one of my favorite Credit Card Posts on this blog (I do have tons in the archives on Credit Cards!).

Happy Blogging, and keep that credit card tucked away!