(As I understand it - The subprime meltdown is just step one in a domino chain, and the equities crash already exceeds the effect of that, because the investment world knows the further steps are on the way. Any obligation, not just mortgages, can get packaged and sold as a "derivative." This includes bonds and all debt instruments. As the economy contracts, the defaults will escalate tremendously, and the "credit default swaps", or insurance for those defaults, has no real backing to make good on the anticipated default storm.)