Been sitting on this for a while because I wanted to make sure I actually understood the mechanics before posting. The standard explanation for 2008 is that banks gave mortgages to people who couldn't afford them, the housing market collapsed, and everything fell apart. That explanation is technically accurate and almost entirely useless for understanding what actually happened. What actually happened is a credit default swap chain reaction. CDS contracts are essentially insurance on debt one institution sells protection to another and collects a premium in exchange for absorbing the loss if the borrower defaults. When the mortgages failed, every institution that had sold that protection suddenly owed money it didn't have. Which triggered obligations at the next institution. Then the next. Bear Stearns was gone in 72 hours. Lehman over a weekend. The entire global financial system was 48 hours from total failure. Not weeks. 48 hours.…