Here is an analogy of where we are today in the secondary markets. I like to think of these CDO’s as being a muffin, you take top quality eggs, flour sugar, butter, blueberries etc (good credit) plus a mystery ingredient (bad mortgages), you blend it all up, put into a cooking pan, bake it and you have a muffin. Then comes along Bear Stearns and they expose the mystery ingredient as being Cow Shit. Sure all the other ingredients are fine but who wants to eat a muffin that has Cow Shit in it. The people who were eating these muffins are now throwing up and all the other customers now refuse to take one step inside the bakery that had these muffins on display. Thats pretty much where we are today. The secondary market will remain locked up until we can identify how much Cow shit is out there and in which muffins they were put into. Until then people are simply not going to eat Cow shit muffins.
