You're confusing a derivative with a debt.
No I’m not.. what do you think is backing that CDO?
And what do you think banks were allowing as collateral on new loans?
That’s right, CDO’s were being viewed as assets by banks who allowed them as collateral, which businesses and others were borrowing against, to go buy more debt obligations... at higher returns, that they rebundled and resold or borrowed against, etc etc etc...
Until now you have a bubble so huge that the only prayer for stopping a global depression is the hope that it unravels very slowly.