Marketplace Whiteboard
- (Marketplace)
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,
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.
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Comments
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From Seattle, WA, 07/13/2009
Where does all this leave the little guy?
From Wisbech, 04/25/2009
You spelled "it's" wrong.
From Los Angeles, CA, 04/20/2009
How does Government spending stimulate the economy, and what's the risk to the tax-payer? Thank you.
From Waterloo, ON, 03/30/2009
Just wanted to say thanks again for these whiteboards, Paddy. Good explanation to help understand more about these financial instruments. Keep it up!
From Seattle, WA, 03/30/2009
To use your example of Sam and AIG, It seems to me that an increase in risk of the insured asset (say the bonds in your example) would result in not just higher collaterals for AIG, but an increased cost to SAM to insure the assets (bonds) since they are now a riskier investment from AIG's point of view. Is this true in fact?
03/29/2009
Great segment! But why does anyone trust the ratings agencies anymore?
03/29/2009
Hi Shel Sam would pay as much as the insurer demanded. He'd pay very little for a AAA company in a boom. But for General Motors in a recession? Well, maybe not as much as 20% per year, but you can bet the insurer would want a fairly fat fee for that coverage. paddy
From Durham, NC, 03/27/2009
Interesting explanation. But why would Sam pay so much for these bonds? The initial $5 million, plus $500,000 a year. Does this really pencil out?
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