Word of the Day: Debt
I was an American Studies major in college, which I've lately realized does not give me the expertise in finance needed to figure out what has gone wrong with our economy. Waiting until after the market crashes is probably not the best time for a crash course in new vocabulary terms like "credit default swaps" and "collateralized debt obligations." If only I'd gotten an MBA instead of an MFA! From my rudimentary research, credit default swaps (CDS) are contracts that promise to cover losses on securities in the event of default. But apparently, as we have all learned, people who own these contracts don't necessarily have the money to cover losses should a default occur. Apparently people bought and sold the idea of money without actually having any money to back it up. Visualizing the Vague In all honesty, I have not been able to uncover what it means to own a collateralized debt obligation. But you can read more about it here in this nifty int...