In light of the ongoing financial turmoil that surrounds our economy these days, there have been all kinds of terms thrown around the airwaves that seem to do nothing but provide confusion to the regular Joe.  So I thought I’d start picking out a few of these less familiar terms and explain, in English, what they really mean.

Take Credit Default Swaps (CDS) for instance.

A credit default swap is essentially a contract by which a buyer of the contract makes regular payments to the seller of that contract, and in return will get a payoff if a credit instrument, such as a bond or other financial note, goes into default.  You …

There have been many terms tossed around lately stemming from the latest economic and financial news. One of the most popular has been the phrase “a run on the bank”.

What does that really mean?

A run on the bank is really a type of financial crisis that occurs when bank customers rush to withdraw their funds over fears that the bank may go under. Such as with Bear Stearns (BSC: chart, web, Y!), when word got out that they weren’t doing so hot, and you saw the mad rush to sell the stock, dropping the price per share from nearly $100 to under …

I’ve been hearing the term “capitulation” being thrown around a lot lately on many of the talking heads programs. In context, it’s used like this: “…we won’t see the bottom of the market until we see capitulation”.

So what exactly does that mean?

In street sense, capitulation means to surrender or give up. You hear it in military history discussions frequently in terms of a surrender. However, in Wall Street sense, it means to “give up” any previous gains as investors sell equities in an effort to get out of the market and into less risky investments.

You’ll see capitulation set …