There was no horse head in my bed this morning, or Michael Corleone breathing down my neck, but JP Morgan Chases’ latest derivatives gamble is sending investors across the globe to re-check their mattresses for good places to stash their cash. Reporting a potential loss of $2 billion, the banking Giant famed for navigating the ’08 financial hurricane is now on the hook for taking the kinds of risks they excoriated only four years ago. This bad bet has already sent a shock through global trading, dragging down the share price of almost every major financial institution in the world.
I won’t burden you with some wild-eyed apocalyptic vision of world finance because it’s a Friday and the sun is shining. What I will do is give everyone a chance to watch the greatest explanation of what credit default swaps actually are, and how they really work. By the way, the Quizzologists love Khan Academy.