I've completely ignorant when it comes to economics, and credit card stuff.. Was talking to a friend and he was telling me about the crazy derivatives bubble that he says threatens to destroy our entire economy. I had no clue what he was talking about can anyone help me out?
I've just been waiting to use this and can't wait anymore =) Nothing personal just can't wait anymore. Let me google that for you I like this one though [ame=http://www.youtube.com/watch?v=r66MMYyz9VI]YouTube - Financial Derivatives: What are They? - Housing Bubble Collapse - Unregulated Insurance[/ame]
Lol I Google it but a lot of what I was finding was full of economist jargon that I don't really understand haha thanks for the vid
Sure, thanks for having good humor about that, it's how it was meant. I'm not too good at explaining this to be honest but I've seen others on the board who are, hopefully one of them wakes up soon or hops on.
I'm not aware of any derivatives bubble. Did he give any specifics, or was he just speaking very generally? Because there are different kinds of derivatives. A derivative is really just an agreement between two parties regarding the value, and future value, of something. If you're referring to the housing bubble, credit derivatives played a facilitating role, but they weren't the root cause. From what I gather, the next bubble we will see may very well arise in the bond market along with falloff from the housing and dot-com bubbles which will carry over since the malinvestments were never really allowed to be fully liquidated.
i dont know of any derivative bubbles but is your friend talking about a housing bubble from which the derivatives are derived and falling home prices and its effects on the price of CDOs and CDO^n that already happened a while ago