Here's a link to an article that explains exactly how and why we are all in a deep dark, smelly, paddle-free environment:
The article explores the seedy world of AIG and its big cheeses, as well as all those CDOs and CDSs which were basically betting instruments for testosterone-led risk-munching monkeys, not to mention the regulators who were well, meant to regulate...
The author, Matt Taibbi, is flip, fluent and very very angry. It's long, lucid and well worth the time.
I particularly liked his analogy of the debt peddlers as alchemists - about 1 in every 1000 might have been a genuine good guy, but basically, most alchemists were con artists just like the investment managers who have made the mess.
BTW, although I am generally pro-Obama, I have read my Krugman and don't believe in the rescue package. But I suppose it is like the emperor's new clothes: enough of the world's stockbrokers seem to believe and perhaps that will be enough to restore confidence. Until the next big bank is discovered to have sat on its own cookies and reduced them to crumbs.