[quote=barnaby33]
You kinda dodged my question then answered another one. I asked why someone would buy an investment as toxic as the one that Mish highlighted.
Josh[/quote]

Ok, I think I understand. I thought you were asking why someone would buy a slice of that particular MBS and I was asking you, well, what are the prices, parameters, etc. Now I think what you were asking was why someone would have bought that security at par in its original form given how horribly pathetic the collateral was. Which is a more logical question.

Lots of answers, all bad ones. Pure stupidity, for one. Two, choosing to hedge short-term career risk over longer-term problems. (Some guy’s boss: “Look, Chet, the guys at Bear are making money hand over fist on this stuff. Why aren’t you diving in? Maybe this isn’t the right job for you.” When you’re making a couple a million a year, lots of folks will take what they can get in the short term and assume that the long term will work itself out.) Three, group think. Can so many folks be so wrong about such a huge segment of the market? Surely not!! Oops! I’m sure there are others, but that’s off the top of my head.