Tranches are bundles of loans mysteriously sorted and packaged according to how risky they are. Large corporations buy tranches and use them as collateral to borrow money from other large corporations. These corporations are owned partly by individuals, but mostly by still other large corporations, which themselves might very well also be owned by more large corporations yet. In the end you have millions of actual home loans at one end and millions of actual individual investors at the other, with an undecipherable maze of legal entities and financial instruments linking them. (You might as well discuss quantum theory, it’s easier). Few or none of the flesh and blood owners have any idea what’s going on, until finally one day they wake up and BOOM! their money is all gone. (If anyone knows what happened, it’s probably the managers hired to manage these various legal entities, but they have just voted themselves enormous bonuses and never have cared to socialize or communicate with the pitiful rabble who own the stock anyway.)
Economists don’t worry about these things, though. (Nader does, but Nader isn’t an economist and he’s crazy too.) Economists worry about welfare Cadillacs, transfer payments, and waste in Democratic budgets. Government, in sharp contrast to the free market, is inefficient and corrupt and can never do anything right.