Although the NY Times today has a nice "explanatory" article on the credit crunch, including the very nice graphic here, perhaps a better way of examining the credit crunch and its potential for disaster is by looking at 2 Mutual funds...
This is the Marketwatch (soon to be Murdoch's Marketwatch!) snapshot of the PIMCO Total Return Bond Fund, which I believe is the largest bond mutual fund in the US, if not the world.
If you have a 401(k), no doubt either this fund or a similar offering from Vanguard or Fidelity is the "safer, more conservative" offering in your portfolio.
It's said to have about 77% of its portfolio in AAA rated securities (which, as the NYT graphic above mentioned, just might include collateralized debt obligations (do a search of the PDF) which just might - it's not ruled out - it just might be infected with BBB sub-prime collateralized debt obligations.
We really can't tell, and especially now, since like most companies, PIMCO doesn't publish their portfolio changes daily (maybe they should, by law?)
What's odd to me is that its yield is recorded by Marketwatch as6.28%.
Now to me, junk, being junk should be priced mucho risky relative to the "total" market.
But there's only a 2% spread.
This says to me that the credit crunch right now is either in an embryonic stage, with truly catastrophic results still to be shown, or that PIMCO is ripping us off.