A credit crunch is a bit like a bungee jump: the second one might be just as extreme, but the first one is always the scariest.

We're in a credit crunch right now: investors continue to skitter away from any kind of credit associated with mortgages, banks, or the wisdom of credit-rating agencies.

As a result, many financial markets remain unusually illiquid, inefficient, and bad at doing their primary job, which is allocating capital to where it can best be used. In that sense, very little has changed since the chaotic days of the credit crunch this summer.

But there's a big difference between now and then: no one is panicking. Celebrity fund manager Jim Cramer isn't disintegrating on live television; Federal Reserve chairman Ben Bernanke isn't cutting the discount rate by half a point in the wake of an unscheduled, emergency meeting of the Federal Open Market Committee.

Things might be bad now, but at least market professionals have a feeling that they know what the problems are, and how we got here.

"In some ways things are worse than they were during the summer," Deutsche Bank credit strategist John Tierney says. "The difference today is that people understand what the demon is. In the summertime there was a big black hole there."

So, with the benefit of hindsight, what did happen this summer? It certainly wasn't your grandfather's credit crisis (or that of your Argentine cousin), where a wave of defaults decimates the assets of the banking system.

Rather, the root of the problem was in the technology of securitization—and the fact that for decades now, U.S. investors have happily bought billions of dollars in mortgage-backed bonds without having to worry about whether borrowers pay them back as promised.

"Mortgage credit and the issue of default generally have been a backwater," says Tierney's colleague Karen Weaver, global head of securitization research at Deutsche Bank. "Most of the mortgage credit risk that was taken was taken by the G.S.E.'s."

The G.S.E.'s are government-sponsored enterprises like Fannie Mae, Freddie Mac, and Ginnie Mae: huge companies that buy up mortgages and then issue their own debt. Since Congress created these private companies, their debt carries an implicit government guarantee.

In other words, for almost all investors in mortgage-backed bonds, credit was simply never an issue. You would buy G.S.E. debt, and although you might not be sure when you'd be paid back (there was still a prepayment risk), you knew for sure that you'd be paid back, and that you'd be getting interest on your money until that day arrived.