How credit cards become asset-backed bonds
Mortgages arent the only financial instruments that get turned into securities. Marketplace Senior Editor Paddy Hirsch explains how companies make money by buying credit card debt and bundling it. More coverage of the financial crisis is at marketplace.org/financialcrisis
Tags: hirsch, financial crisis, credit card debt, Credit, assetbacked, bonds
Related posts:
Well i guess you can actually get away with paying a credit card debt, by demanding that the c-company provide you with a proof of debt or loss, right?
Anyway isn’t not kinda fraudulent anyway to securitize debt in this manner?
why dont you talk about comex and the guys that are being payed 25% more in cash then the contract is worlth?
how the hell does a student loan fall under an asset?
did you know that your birthcertificate # is traded on the global exchange
Times are tough for many. If you need to make some money right now here’s a guaranteed way to do it…
GuaranteedWayToMakeMoney [dot] com
great explanation. but he did not explain how “dave” earn profit for himself? is it based on commission? percentage of A/R? or what?
I want to know.
Yes, I would think so.
it would be a shame to be unaware that any percieved ‘oppurtunity’ in the control grid is actually a profit in someone else’s point of view
hey i’m new to this and i thought i just learned alot. now i read your comment and i think if someone explained to me in 10 seconds how this worked I might not have understood. so anyway, your comment basically is a public cry for “HEY EVERYBODY LOOK HOW AWESOME I AM OMG LOL” anyway i’m going to go back to learning what goes on behind the scenes with credit cards. like anyone who used them should.
a bit off topic. Do accounts receivables, in case of contracts between consumers and utility companies, show up on the asset side of the balance sheet (on annual statements)?
So where is the collateral? Isn’t that the asset in ABS? Also, I’d like to see how a glass of champagne turns into a bottle of champagne to create a CDO. That would be fun…
Paddy for chancellor of the exchequer
can we move along a little faster please? this is a 10 second point made into a seven minute lecture.
Top marks, Paddy. There is a lot of information out there, but none of them employed such useful and easy to understand metaphors as you did in this video. It’s exemplary, I find, that the senior editor of Marketplace has managed to explain this phenomenon in a way that anyone might be able to understand regardless of their background. Far too many media outlets have lost sight of smaller investors and ordinary citizens.
Nice… I hate credit cards and now I know why.
of course they fucking are, what do you think people are going to lend you money for nothing?
thank you for posting your videos. there are a lot of information that is clear and easy to understand.
how do the ABS handle the differing maturity(repayment)of the loan?
so people out there are making money off my debt wow they find every loopholes to pinch a penny opportunistics parasites
I think it’s comical that when he’s finished lecturing, he then tosses his marker.
So this is why citibank failed. It makes sense.
Thanks! You are the first person able to make me understand how the system works. The pyramid of glasses is a very effective example!!!!
Your english is clear and understandable!! Thanks again! Provenzano99
I recon the bottle needs a good shake.
This video he is not for nor aginst credit cards and the debt they place on socity with intrest. He is mearly explaining how companies change cc debt into something that can be traded backed by collateral. Which is what really happens in the market everyday. Dont change the subject. Credit cards, loans, and debt exist. It is a way of life we have created and may have to pay for in the short future but the more the public knows about how the economy works the less “in need of a drink” we will be.
does this system sound at all equal or fair? ask the question.. WHY SOULD THE PEOPLE WITH THE LEAST AMOUNT OF MONEY HAVE TO PAY MORE? because that is essentually what the credit score does. it is nothing less then modern day slavery. and that my friends is the ROOT cause of the mess that we find ourselves in today. this is about treating people differently. it is a system that is doomed to fail. and it wont make 1 bit of difference how much made up cash they toss at it. humpty dumpty is done
there is a deep and serious flaw in that way of thinking. and im going to tell you what it is.. in order for people to HAVE to use the credit cards to begin with. you have to make sure that they don’t have enough money to begin with. and when they cant pay the bill because there is now an intrest added to it. what it boils down to is the people that create the money and get thier hands on it first use it to keep themselves in positions of power. and to charge people without money more for goods.