How did 'crisis' spread through the financial system in '07-'08? Specifically, what is the process by which a subprime mortgage impacts the health of the credit markets as a whole? An explanation in the context of securitization would be appreciated.
I understand that subprime mortgages are sold to special purpose vehicles but the process is muddled from there.
I don't need a mathematical explanation, a clear conceptual explanation would be perfect.