Marketplace Whiteboard
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A look inside hedge funds
Hedge funds used to occupy a dark, undisturbed corner of the financial world, but over the last year they've been thrown under the spotlight. Still, many people don't know exactly what hedge funds are, or what hedging actually means. 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.
Meet Cap 'n Trade
Cap and Trade is the linchpin of the government's effort to curb carbon emissions. Senior Editor Paddy Hirsch explains how the cap and trade model works.
Capital structure
In stories about the auto companies and the banks, we've been hearing about debt-to-equity swaps and exchanging preferred shares for common stock. To understand how those work, you need to understand a company's capital structure. Senior Editor Paddy Hirsch explains.
Shadow banking
The shadow banking system is a key component of the U.S. economy, but the financial crisis has frozen it solid. Senior Editor Paddy Hirsch explains what shadow banking is and why it's important enough to warrant its own bailout, called the Term Asset-Backed Securities Loan Facility, or TALF.
The public-private partnership
The U.S. Treasury Department plans to recruit private investors to take toxic assets off banks' balance sheets. Senior Editor Paddy Hirsch explains how the plan is supposed to work.
Collateral calls
Millions of Americans are wondering why AIG has paid so much taxpayer money to other banks. One reason is because AIG has had to honor "collateral calls" -- demands made by banks on the insurance contracts it's written. Senior Editor Paddy Hirsch explains,
The Uptick Rule
Bankers have been debating bringing back the uptick rule for months, if not years. This week the debate made it to Capitol Hill. Senior Editor Paddy Hirsch gives a quick and dirty explanation of what the uptick rule is, and why it could be reinstated to turn the American taxpayer into one of Citigroup's biggest stockholders. Senior Editor Paddy Hirsch explains.
Cramdowns
A debate is raging in Washington, D.C., about how to deal with America's foreclosure problem. One proposal is to restructure the loans using a tool usually seen in bankruptcy courts: The "cramdown." Senior Editor Paddy Hirsch explains.
Write-downs
markets have deteriorated, "write-downs" have figured prominently in more and more corporate reports. What are write-downs all about? Marketplace Senior Editor Paddy Hirsch explains.
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Comments
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From Seattle, WA, 03/14/2009
Paddy-Brilliant ! Your concise delivery, extreme wit and wonderful balance of teaching without talking down to the audience or allowing for any show of arrogance is refreshing. It gives me hope for the future of media and the Internet. Just when I thought Marketplace was impressive......Way to go Folks !!
02/09/2009
paddy hirsch why dont u try ur hand at teaching wall street ppl...... they really need some of it.
From San Diego, CA, 01/11/2009
Very good explanation. Couple of questions I have always wondered about..(a) why would banks provide such a high leverage to Hedge Funds? What guarantees they have now that we know about some astronomical collapses of Hedge Funds in recent past (LTCM)??
(b) Why all the secrecy in what the hedge funds are buying and selling? If we require Mutual Funds to make all the disclosures, why not hedge funds?
I am sure geniuses at SEC/Congress are asking these questions in hind sight, however why not start now so that we can start to clean up this magical mess. As you have explained so superbly, the amalgamation of rich (aka accredited) people's money plus leverage creates vast concentrations of funds that can sink few select positions that they are holding in a hurry.
From Princeton, NJ, 01/01/2009
Great, informative stuff. Double plus that Paddy Hirsch is a fox. Thanks for the brain/eye candy! ;)
From Toronto, ON, 12/27/2008
Money is created "out of thin air" by the Federal Reserve. When Paddy talks about the FED buying the Treasury, that is called monetizing the debt. Potentially very inflationary.
From Edina, MN, 12/24/2008
Paddy
Would you be kind enough to explain in detail, what do we use for money? How is money created? Who can create money? How do money get into circulation so that I can use it.
From Minneapolis, MN, 12/22/2008
I work in the financial industry providing explanations to financial advisors like the ones found here. I just want to say how much I appreciate the concise and straight-forward explanations that even help some one like me understand the core concepts better and how to explain them.
From Poughkeepsie, NY, 12/22/2008
I am studying financial translation and I have to say I am a huge fan of your videos. I think they are fantastically helpful for understanding such complex concepts. Keep up the great work!
From Chicao, IL, 12/22/2008
Thank you so much for the videos. I have learned so much just by watching them. Entertaining and informative! Keep up the good work!
From Tuscaloosa, AL, 12/18/2008
Very interesting and informative. Bravo!
12/18/2008
Cap markets are unstable. In the past there was no way to make them stable. But today we have computer power that can be used to make them stable. By using the greater computer power of today we can have a much higher turn over of cap in the cap market. This higher turnover will make the market harder to fix or control and the market will no longer have the unstable run ups or declines. Who can change or control the market when say 20% of the capital is trading each day. So now that we have the compute power to provide for all these transactions that will smooth out the market how to we force people to turn over at a rate of 20% a day? Easy, put a cap gains tax of 0% (zero) on all gains of 7 days or less and put a cap gains tax of 90% of all gains of 7 days or more. The likes of Yahoo Micosoft and/or Sun Micro Systems will give us the systems that will provide automated software agents to support turning over one's investments every 7 days (based on the specs you give the agent). A system like this will make the financial markets work as smoothly as the local fruit market.
From Newport News, VA, 12/18/2008
I love this show. I have learned so much about market just by watching your show. In fact, I am thinking changing my major to health management. What do you think about that? What is your opinion about students majoring in some type of business with the way the market is today? Do you think there is a future for business student? Keep up with your educational messages and thank you for your attention to my concerns.
From Los Angeles, CA, 12/17/2008
Wow, these are fantastic videos. I found them completely by accident.
From Charlotte, NC, 12/15/2008
I like your video presentations. Is it possible for you to take a session on 130/30 Strategy used in Hedging?
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