Marketplace Whiteboard
- (Marketplace)
How credit cards become asset-backed bonds
Mortgages aren't the only financial instruments that get turned into securities. Marketplace Senior Editor Paddy Hirsch explains how companies make money by buying credit card debt and bundling it.
Hostile takeovers
We all know what a takeover is. That's when one company agrees to be bought by another. But what happens when companies don't agree and the takeover goes hostile? Senior Editor Paddy Hirsch explains.
Derivatives
Credit default swaps? They're complicated -- and scary! The receipt you get when you pre-order your Thanksgiving turkey? Not so much. But they have a lot in common: They're both derivatives. Senior Editor Paddy Hirsch explains.
Bonds, notes and bills
So much government debt! But what's the difference between the Treasury's bills, notes and bonds? Senior Editor Paddy Hirsch explains.
Inflation
Most economists agree that inflation of about 2% or 3% annually is a natural function of a growing economy. But people are worried government stimulus measures could spark much higher inflation. Senior Editor Paddy Hirsch explains
High-frequency trading
High-frequency trading is creating a ruckus on Wall Street. Marketplace Senior Editor Paddy Hirsch explains what high-frequency trading is and why some people are up in arms about it.
Factoring
Many small businesses get the cash they need to operate and expand from so-called factors. One of the biggest factors in the business is CIT, and with CIT on the ropes, small businesses are worried. Senior Editor Paddy Hirsch explains what factoring is, and how it works.
Financial alchemy
Many asset-backed securities have been downgraded from AAA recently. But at least one issuer has miraculously repackaged a downgraded deal to make some of its bonds worth a AAA rating again. Senior Editor Paddy Hirsch explains.
Where's the toxic waste?
Banks are paying back TARP money and claiming they're the picture of health. So what happened to all those toxic assets that were clogging their arteries a few months back? Senior Editor Paddy Hirsch explains.
Dark pools
Dark pools are exchanges where people trade stocks anonymously. Senior Editor Paddy Hirsch explains how they work, and why the SEC is considering regulating them.
The 'repo' market
Senior Editor Paddy Hirsch explains why the repurchase (or repo) market is a vital part of the financial system, and why the government is considering changes to it.
sponsor
The Specials
Conversations from the Corner OfficeTM
Marketplace goes one-on-one with CEOs, company founders, head honchos...
Marketplace on iTunes U
Marketplace is on Apple's online education platform, iTunesU. Get free downloads in subjects like History, Science, Business and more. Study up
Comments
Comment | Refresh
From Chicago, IL, 04/21/2009
I can see the analogy between credit card receivables and the securities with the example of bond ratings but couldn't get the 'asset-backed' part...???
From Boston, MA, 02/09/2009
Illuminating.
From palo alto, CA, 01/30/2009
I wonder if you can shed some light on why companies who are going to the US government for money to save their companies would be taking that money and handing some of it out in bonuses or buying new corporate jets?
Are they incompetent?
Are they stupid?
Are they greedy?
Are they legally bound?
Are they really in a position of strength and they know it?
Are they immune to any repercussions, and if so, why?
From richmond, VA, 01/24/2009
Where were you ten years ago. When I was calling everyone an idiot and kept loosing jobs. The experts were so "wacked out". I nor anyone else in their right minds can justify what they were doing. The big dummies.
From Moscow, ID, 01/24/2009
I am extremely pleased with your presentations. That said I would ask that you explain the action and purpose of wage fixing. Which I believe to be stalling our economy out of restarting.
From San Jose, CA, 12/24/2008
I think it's humorous (and appropriate) that Paddy ends the segments with "...leaving us badly in need of a drink."
Great whiteboards! A good use of time to check them out.
From singapore, 12/07/2008
i can't view the videos; they all say 'sorry, this video is no longer available'... does anyone have any alternative way to view the videos?
please send your ideas to premiumcarrot@gmail.com
From MD, 12/07/2008
Great Videos! Can you explain Structured Investment Vehicles (SIVs).
From Miami, FL, 12/06/2008
For what its worth... The Asset Back Securities behind this Fallout can be used to help homeowners arguments during a foreclosure. The Mortgage and Note were sold improperly and the holder can not prove possession. This can result in the case being dismissed. The Homeowner wins.
From Atlanta, GA, 12/04/2008
Keep doing the vids Paddy Hirsch. We Americans need to better understand our economy and how it works.
Hopefully, you explain one day on how hedge funds and private equity work on separate vids, but also how they both interlinked with one another.
My theory is that hedge funds and private equity firms are some how involved in the current crisis. If they are involved in the current financial crisis, I hope you could do a vid on this. If not, then I am wrong.
Thanks.
From Naperville, IL, 12/03/2008
Whiteboard videos on financial crisis are fabulous! Are you planning similar vidoes on oil price (supply demand vs speculation)?
12/03/2008
Mr Hirsch; Can you explain the effect of all these bail outs on the money supply?? Some people say government is pumping too much money in the economy with inflationary consequences; but others point out that in the curent market melt down & economic contraction significant amount of capital has been destroyed, therefore the Fed has enough room to rebuild the money supply. Which group is right?? Thanks
12/03/2008
Mr Hirsch; Can you explain the effect of all these bail outs on the money supply?? Some people say government is pumping too much money in the economy with inflationary consequences; but others point out that in the curent market melt down & economic contraction significant amount of capital has been destroyed, therefore the Fed has enough room to rebuild the money supply. Which group is right?? Thanks
From Duluth, MN, 12/02/2008
Really great! Helps make this murky subject a bit less cloudy. Still find it hard to believe people invest in these sorts of things, but perhaps I am and don't know it!
From Chicago, IL, 11/30/2008
This video is fantastic. Thank you very much for this invaluable resource. I'm sure I will check back here again and again.
From Hillsborough, NJ, 11/29/2008
Help me understand . . .
So if everyone pays their cards in full on time, the bond holder gets 0 interest, but still has their equity?
Or said another way the bond holders only earn money if some percentage of card holders pay late.
What are the statistics on the number of people who pay late and the balances they carry? Where can I find them?
From San Diego, CA, 11/29/2008
This is absolutely fabulous! The whiteboard demonstrations and explanations are clear and easy to understand. It's especially memorable with the use of metaphors to describe the complexities of today's financial structure, mechanics and dynamics.
From Dallas, TX, 11/28/2008
I think these videos are very well done. However, I think you should make the point that the credit default swaps were called that so that they would not fall under the insurance industries strict regulations. Indeed banking officials lobbied congress to not consider them insurance as then it would have be more controlled. They wanted the cds system to not be regulated so they could make more money. While they may have not understood the complexity of the system that resulted they most certainly knew that regulation would have curtailed their ability to make huge profits. Now we are left holding the bag. Let's hope the new administration sees fit to call an insurance contract what it is.
From Ottumwa, iowa, IA, 11/28/2008
All of your pod casts say "Sorry Video no longer exists"
From NY, 11/27/2008
As a finance student, I find your instructional videos absolutely essential in understanding the aspects as of this complicated industry. Thank you so very much.
From South Miami, FL, 11/27/2008
I greatly appreciate these short but very instructive videos. Thanks for doing them.
From Sioux Falls, SD, 11/26/2008
What does "Asset backed Security" mean? Can the term be applied to credit card debt?
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.