Wednesday, September 22, 2010
For those who are unsure of what derivatives are here is a simple explanation: it is a gamble on debts. It is the betting between entities on if lent loans will be paid back. It is like gambling on a horse race in the fact that you don't earn any of the racing money, but you can make bets on it. The lack of regulations against these loans led them to be widely traded on the loans of houses, and combined with overloaning to people who shouldn't have been taking them out on houses that they couldn't afford. Then the housing bubble popped and of course with wall street so far up government they got bailed out by us borrowing money from them, and then paying them with it, leaving the government with incredible debt because, of course, the government once again did not do what was in the interests of the people.
Posted by Gangrenous at 4:23 PM