In a recent NYT article "What Created This Monster?"......... http://www.nytimes.com/2008/03/23/b...58ac06e9bfd431&ei=5088&partner=rssnyt&emc=rss ......the recent Bear Stearns debacle was blamed on "credit derivatives' tied in with the sub-prime mortgage market. So I looked up "credit derivatives" on Wikipedia. Does anyone understand this stuff: In finance, a credit derivative is a "financial instrument or derivative whose price and value derives from the creditworthiness of the obligations of a third party, which is isolated and traded." Credit default products are the most commonly traded credit derivative product and include unfunded products such as credit default swaps and funded products such as synthetic collateralized debt obligations (synthetic CDOs)(see further discussion below). Credit derivatives in their simplest form are bilateral contracts between a buyer and seller under which the seller sells protection against certain pre-agreed events occurring in relation to a third party (usually a corporate or sovereign) known as a reference entity. These events are called credit events and they relate to the creditworthiness of the reference entity. The reference entity will not (except in certain very limited circumstances) be a party to the credit derivatives contract, and will usually be unaware of the contract's existence.