Don't forget, you can vote for your own video.

*long

but informative!

Invocations (long) cannot be called by eff because eff is not privileged - sorry.

I'm not a banker, or really excellent with money, but insuring stocks and bonds, even to other bankers, seems like a downright stupid idea, even before this great explanation. I understand how you can compare a car/driver insurance policy to a stock/business insurance policy, but there's one HUGE difference. When a driver has a wreck, it's a small amount of those cars that were involved. When a business fails (and it's stock) EVERYONE WHO HAD THAT STOCK crashes! It'd be like saying everyone who was driving a Ford Taurus had a wreck all at one time today! How in the world do you expect to cover that!?

great explanation, i actually understood it!

and yeah, the whole economic system is based on Nothing, just betting on bets made on bets made on bets.

*long

This video has been flagged as being at least 10 minutes in length - declared long by kulpims.

The difference is that if you take out insurance against your stock dropping in value, your insurer only has to pay you (not every investor in that company) because only you are paying out the premiums to the insurance company. If the company chooses to insure several people who are invested in the same company, that's a risk they take, and it's calculated.

The analogy with all Mustang drivers doesn't hold because there's no foreseeable circumstance under which all Mustang drivers would suddenly crash at the same time. A better analogy would be if all the passengers in one airplane took out life insurance from a small insurance company, and the ratings agency was watching as that airplane slowly ran out of fuel over the ocean.

>> ^flechette:
I'm not a banker, or really excellent with money, but insuring stocks and bonds, even to other bankers, seems like a downright stupid idea, even before this great explanation. I understand how you can compare a car/driver insurance policy to a stock/business insurance policy, but there's one HUGE difference. When a driver has a wreck, it's a small amount of those cars that were involved. When a business fails (and it's stock) EVERYONE WHO HAD THAT STOCK crashes! It'd be like saying everyone who was driving a Ford Taurus had a wreck all at one time today! How in the world do you expect to cover that!?