Understanding collateralized debt obligations

The best explanation of collateralized debt obligations (CDOs) I’ve heard so far comes from the latest episode of the Planet Money podcast.  I was driving to work at the time, so I don’t have the exact time index of it, but I think it starts at the 16 minute mark.  The whole episode is worth hearing too.

Wikipedia has something to say about CDOs too, but I prefer the Planet Money explanation because it does a great job of showing how just one CDO can connect widely disparate parts of the economy.