Credit default swaps
a: Credit default swaps ~
b: Burning down a house you don't own
What: From article:
"See, in everyday life, you can't insure things you don't own. Thankfully, your neighbor can't take out homeowners insurance on your house. If the entire town could buy insurance on one house, they'd have a huge incentive to make sure it was destroyed. They'd burn it down, blow it up, bulldoze it, what have you, pocket gobs of insurance claims for their trouble, and happily move onto the next town. For good reason, laws prohibit this."
Useful?
Writer: Morgan Housel
LCC: H
Where:
Date: Sep 6 2009 4:55 AM
# 59 Critique Analogy