Can someone explain in simple terms, what is going on with the credit crisis?

The problems they have are how they handle debt. They have Instruments to help banks to function where they tale debt and sell it then insure it. They do this by leveraging which is to say they gamble on the future hings will get better and they can pay the money back. They bundle bad debts and sell them for what they ar worth on paper and lets them ask the central bank for more money. All of this happens on paper and when one bank can not pay the original bank gets back all the debt good and bad and then they can not justify the debt because they do not have the money to operate Loan money.

Greed. Too many people were willing to make bad loans to folks whose credit was less than stellar. Anything to jack up and sell pricey houses. Not everyone of course was trying to move up to something they could not afford but there were plenty. Some folks were poorly educated when they went to purchase a new house. Realtors and lenders should have made sure they understood the loan and house buying process. The housing market collapsed like a deck of cards. The economy took a hit. People are scared. Money is tight. No loans no purchases. Stock market is falling like a rock. Hopefully things will get better soon. Morale of story: Purchase what you can afford. Do not be greedy. Make an educated purchase.

Banks & investment firms sunk money in bad investments, then went belly up. Now, people are afraid to lend money to anyone, because they're afraid they won't get paid back. So now, nobody is trusting anyone. No credit = bye bye economy.

simplest way: many people who were risky creditors (people who loan money) were given loans and they defaulted. so many that some greedy lenders folded up, and the government wants to prop them up.if you have good credit, you have no worries.

i know this credit crap has gone on to long!!!!i worked for a bank once and they really investigated customers credit like there life depend on it!!! they would not give me any credit and i worked for them eight years!!!

people got scared take money out of banks and stocks, so no more money now... depression..

No No No! You sound RIGHT. I wish more people thought like you and me. I have always felt that NO ONE should go hungry or homeless have to work 2-3 just and just be barely making it. Not in America I thought. I knwo this country has enough to help everyone as well as pay African Americans their reparations which are so over due. You know what I think? I think the government has made a lot of dirty deals with a lot of people "under the table" and American being the big bully that it always has been, dont want to pay it all about. Just like a person in debt because of credit cards. If they can't pay what they owe then in court they make a settlement. That is exactly what American has done. Our government has weezled out of its duties and obligations.