People often think of bonds as being low risk. They are lower risk than stocks, but they are still subject to all sorts of different potential problems.
JPMorgan feeds on our hunger with its lucrative food stamp card business. And AIG gets into the game of letting strangers bet on your life. Why shouldn't hedge funds make a little extra dough from the collapse of your hometown?
Meredith Whitney's unsupported claim on 60 Minutes gives muni-problem-deniers ammunition to claim there is no substance to the argument that there are serious problems with certain muni bonds.
Monoline insurance companies got greedy and wanted a piece of the sub-prime action. They started backing sub-prime mortgage-backed securities. Soon the mortgages blew up.