If you have not seen The Big Short, you really should. I am a big fan of Michael Lewis' books and this was as good a book as any he has ever written.
For those who don't know, the Big Short is about a group of folks who independently realized in 2005 that the real estate market was headed for big trouble. As a result they decided to short real estate bonds and securities, in a big way. They turned smaller amount of money ( in one case $120,000 into $449 million).
This type of finance is rather complicated, so one of the devices they use is to "pause" the movie for explanations like this one:
And this one:
Fortunately the cameraman never panned down on her shirt or I would never have understood the explanation.
If you have not seen the movie go see it-It's a great way to understand how the system is rigged.
Finally, here is a good explanation of how mortgage bonds worked:
Mark Baum: The banks have given us 25% interest rates on credit cards. They have screwed us on student loans that we can never get out from under. Then this guy walks into my office and says those same banks got greedy, they lost track of the market, and I can profit off of their stupidity? Fuck, yeah, I want him to be right!