I have to disagree with you on this, I believe the correct analysis is the opposite - the non-performing loans and declining or stagnant home values in the U.S. housing market have been the main reason for the credit and liquidity shocks in the financial sector which, in turn, have been manifested as uncertainty and illiquidity in the derivatives market. Sure there are other factors at play but the biggest effect is traceable back to the valuation problems in the mortgage pools and mortgage-backed securities and derivatives.
I think that we're saying the same thing - that the mortgage problem has created the turmoil that we're seeing in the derivatives market. My point is/was that the derivatives market is a complete house of cards that contains huge amounts of poor, greedy financial bets having nothing to do with the mortgage industry.
If, and when, the derivatives market explodes it will make the thing that set it off - and the thing that is the sole focus of many people - seem like very small potatoes in comparison.