Marketplace Whiteboard
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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,
PIIGS
Five little PIIGS. Senior Editor Paddy Hirsch explains why problems with certain European countries' sovereign debt could blow the house down.
How the big banks make the big bucks
We keep hearing the banks aren't lending. The truth is they are lending, and making a lot of money doing it, thanks in large part to one very special borrower. Senior Editor Paddy Hirsch reports.
Ratings conflict
Ratings agencies are paid by the sellers of the securities they rate. Critics say there's a conflict of interest there.Senior Editor Paddy Hirsch explains.
Look out below!
Commercial real estate is giving Ben Bernanke a big headache. Senior Editor Paddy Hirsch explains why it's such a threat to the economy.
Interest rates
Confused about the theory of how interest rates can affect economic growth? Senior Editor Paddy Hirsch is here with a handy analogy.
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.
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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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