The problem is that a number of them have been built on the assumption that counterparty risk and/or liquidity risk could be, to a large extent, ignored - i.e. they are valuable so long as people thing they are but not if everybody actually needs to cash them in - because the whole house of cards folds, then.

That's what we're seeing now. With nobody willing to take one new risks on these, the existing ones suddenly cannot find buyers, and thus have no apparent value - the value will appear only if and when they are actually called on, and the counterparty pays, or not, the requisite amount. but in the meantime, they are a huge black hole. But a lot of finance was built using as foundations these products, so there are whole edifices that suddenly don't know what they are standing on.

Fun stuff. Good time to be a litigation lawyer, I expect.

In the long run, we're all dead. John Maynard Keynes