Remember that game? You build a tower with wooden pieces, and then try to remove pieces without the whole thing tumbling to the ground.
To understand the current Wall Street fiasco, imagine that derivative investments were those wooden pieces--remove the wrong piece and the whole tower comes crashing down.
Well, remove subprime mortgages from the picture--something which many of the so-called brilliant lights in Wall Street used to build their towering investment edifices--and you can see that collapse was inevitable.
If no one is buying subprimes, that particular wooden piece is removed from the game. Ergo, boom! Who couldn't have seen that coming? Apparently most of Wall Street's analysts.
Simplified explanation? You bet. However, if Wall Street investors had stuck to simpler, time-tested and tried stuff, we wouldn't have to be bailing their asses out with taxpayer money.