Every day, it seems, investors hear stories about a "credit crunch" that's squeezing pocketbooks around the country. What's it all about?
The bad news started in the housing market, as a big runup in prices deflated and homeowners began to default on mortgages in record numbers. That hurt the value of arcane debt securities tied to "subprime" mortgages made to high-risk borrowers -- leading to big losses at investment banks and hedge funds.
On Friday, giant insurer American International Group booked a $5.3 billion quarterly loss -- its biggest ever -- after it took a huge write-down on assets linked to subprime mortgages. The loss helped trigger a 316-point, or 2.5%, drop by the Dow Jones Industrial Average...
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