Credit Derivative
You need credit. Some day. You have cash. You have debt. Other parties need credit...some day. They have cash. They have debt. But it's...lumpy.
Sometimes you need cash...a lot of it...like an airline in a bad economy. And in that same bad economy, drug companies do just fine. Like, times would have to get pretty bad before people stopped paying for their Viagra. So in those times, the Steady Eddies might be givers of debt to those who are in need.
The credit derivatives system just mollifies the volatilty in those peak and valley times, and allows for better financial planning among companies, countries, banks and pretty much everyoone who needs credit.
Related or Semi-related Video
Finance: What is the Equal Credit Opport...6 Views
Finance a la shmoop what is the Equal Credit Opportunity Act? alright people while the
federal government thinks everyone should have the equal opportunity to get [Men in Federal Government appear]
into debt isn't that sweet of them you know that Uncle Sam well he sure does
have a heart of gold this federal law makes it illegal to discriminate against
people who are applying for financing on pretty much anything legal based on
their age gender marital status religious affiliation ethnic or national
background or public assistance benefits your credit score however well that
still matters sorry just keeping it real
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