If you have not been listening to the "This American Life" episodes on the financial situation, you owe it to yourself to do so. They are phenomenal. While the top posters here might have been coming to grasps with the what why and how, here is a resource (spread over three episodes so far) which effectively explains a lot of it in a presentation style that should be accessible to all.

This American Life

Show 1: The Giant Pool of Money
Show 2: Another Frightening Show About the Economy
Show 3: A Better Mousetrap 2008