John Cole, at my favorite blog, said he doesn't understand about Credit Default Swaps. This post is for him.
John: to learn about how this mess started, listen to this This American Life episode #355, The Giant Pool of Money
Then, listen to the follow up episode, 365: Another Frightening Show About the Economy
(this one explains all about credit default swaps. I listened to it twice to understand and I think I got it)
I also recommend episode 363: Enforcers
…but only Act Two, titled "Now You SEC Me, Now You Don't."
I also recommend this blog post on DK.
More resources (from TAL):
Alex Blumberg and Adam Davidson (the guys who did that program) have a new daily, free podcast and blog applying that same explanatory power to each day's breaking news on the financial crisis—Planet Money.
A great episode of Fresh Air, in which Terry Gross interviews Michael Greenberger, a former director at the U.S. Commodity Futures Trading Commission. He gives a very helpful, lucid primer on the current financial picture.
A follow-up Terry did with Greenberger, just as good, when the government bailed out AIG in mid-September.
And next up, the cure will be worse than the disease: