Economic Fallout

I have to learn more about these financial institutions and how they all work with our economy.

What I have long understood intuitively (for years, even) is that much of our economy is built on air. I'm one of those people who believes in an economy that produces a thing - a material thing. Creating something out of thin air isn't the same as using natural resources and talent/innovation to create a product. Those products have value because they are in limited supply or require a particular knowledge to create. 'Thin air' products have no intrinsic value except that I tell you its valuable and I use marketing to make you want to have it because you'll make lots of money when you sell it to the next person.

I think that only describes part of our current economic situation though. I'm not clear on how all the components fit together...stock market, financial instruments, subprime loans, and the failure of financial institutions and insurance companies and banks.

The other thing I don't yet understand is how it all affects me. I don't see panic in the streets of my area. I'm not clear that I'm involved directly. Its the collateral damage I might have to be concerned about.