At the heart of this credit mess we're slogging through is the art of securitization. For the most part, this art has been well practiced, creating all sorts of ways for risk to be offloaded and thus for liquidity to be expanded. Many people benefited. But at some point, it can easily become something of a dark art. The broad movement to turn collections of low-rated debts into highly rated vehicles in some way has been ingenious, allowing banks and issuers to offload stuff that would have been much harder to sell. It all came down to the credit rating. As long as the CDO or other vehicle had enough A's in its rating, there was a huge market (apparently overseas institutions). But then the underlying securities took a massive hit and people are wondering what effect that will have on the packages they own. You have to think that the CDOs might be downgraded at some point. So far, they seem to be performing. But everyone knows that a wave of defaults could cascade to even the highly rated tranches. (Right now, ratings don't mean much.) And fear is a prime mover on Wall Street.   

For a historical perspective:
- here's a New York Times article