Why Michael Burry Used Credit Default Swaps? (The Big Short Explained)

The Movie is Based on the book "The Big Short: Inside the Doomsday Machine" by Michael Lewis. It is recommended to read the book if you want to learn everything in detail.

Watch this video to understand the 2008 crisis 👇👇

In this video, we explained the credit default swaps and why Michael Burry used CDS to short the housing market during the 2008 financial crisis.

#thebigshort #bigshort #michaelburry #recession

[millenialmusings]

One question - how was burry so sure that the banks would honor his contract and not go bust? If the housing bubble burst, these banks themselves had risk of going bankrupt. His CDS would be worthless if they went bankrupt right?

[AnthonyNoto]

Google says he shorted CDS. I was so confused. Great video, can’t find any explanation as good as this

[pamelie]

Hi, if Burry sold his CDS back to banks, how did he profit so much of it? He did not wait until the housing market actually collapsed and the banks went almost bankrupt. How did the banks agree to buy them back for so much money? Thank you!

[thelammas]

There is this little problem of expecting a corporation to pay you for deteriorating credit in general, when their own creditworthiness is collapsing

[equusamans]

What I don't understand:

Mark gets 30.000 PLUS all premiums paid! Who would ever agree to that? If I was Daniel, I'd only agree to pay 30.000 in case Mark can't pay only if I get to keep the premiums paid until that point or at least a cetrain percent of it.

Can somone explain what I'm missing?

[willn]

Enjoyed binge watching your videos. Are you able to make one on the frozen concentrated orange juice from Trading Places?

[jimparsons]

Contract assignments, then, of a sort. The person or entity that now "owns" the contract is then obligated to obey the terms of the contact. I've heard that this a a common practice in business. Not just with stock market options.

[Hamboarding]

Mark Baum doesn't actually exist, the person on whom the character Mark Baum is based is Steve Eisman.

[emmanuelquerol]

Friendship Default Swap.. haha, I am going to use this term! I'll insure some friends' debt and receive monthly premiums.😁

[danieln.]

plot twist: they're no longer friends afterward :D

[mrralph]

So he bought insurance on a loan he didn’t lend ?

[primegaming]

Whatever happened to the channel?
It should have over millions views

[Nic-khkr]

So if burr wouldnt have sold his CDS after the crisis...or before (i didnt watch the movie yet) he would be the proprietor of all of those mortgaes??

[seanwebb]

Mark Baum wasn't the real person. This video is simplistic and doesn't tell us much.

[dougmurray]

Why are you showing images of Christian Bale, and don't give an answer that he played Burry in the big short.