A great read into the background of the subprime crisis by Michael Lewis who wrote Liar’s Poker, the classic expose of now defunct Salomon Brothers investment bank in the late 80s.

One of the key points he makes is that Wall Street banks created many synthetic CDOs on top of actual CDOs. This may help explain why the crisis has become so widespread when the percentage of actual subprime loans is small relative to the damage in the wider markets. In essence Wall Street set itself up for this crash by replicating poisonous assets.