Timm explains Credit default swaps...

that was great - passing it on

Its totally and completely innacurate, even as a joke. Like so many people ignorant of finance, the author of this confuses CDS with CDOs and other asset backed securities. They are not in any way shape or form the same thing, and the government is CERTIANLY not backing anyone buying or selling CDS. A CDS is basically an insurance policy on a bond you may or may not own - including an asset back one, but it can be on a government bond, corporate, muni, or even a straight-up bank loan. This cartoon is NOT about credit default swaps at all, its about asset backed securities.

Jason wrote the title too quickly, but the indignation seems excessive. Hope this lightens up the atmosphere...
http://www.youtube.com/watch?v=bZ0SRgh3X9Q

I think its just funny. "frog backed " securities..pretty imaginative way of depicting mbs. In reality its closer to mbia or ambac "wrapping" a bond and then thme not having the capital to cover the bond in default