MIKE WHITNEY'S LATEST ARTICLE

This Is Not A Normal Recession Moving on to Plan B By Mike Whitney November 20, 2008 "Information Clearinghouse http://www.informationclearinghouse.info/article21280.htm EXCERPT: There are many types of of structured instruments including asset-backed securities (ABS), mortgage-backed securities (MBS), collateralized debt obligations (CDOs) and collateralized loan obligations (CLOs) all of which provide a revenue stream from loans that were chopped into tranches and turned into securities. There are many problems with these complex securities, the biggest of which is that there is no way to unravel the individual pools of loans to isolate the bad paper. That's why subprime mortgages had such a destructive affect on the secondary market, because--even though subprimes only defaulted at a rate of roughly 5 percent--MBS sales slumped nearly 90 percent. Why? Former Secretary of the Treasury Paul O'Neill explained it like this: "It's like you have 8 bottles of water and just one of them has arsenic in it. It becomes impossible to sell any of the other bottles because no one knows which one contains the poison." the real purpose of these exotic investments is not to provide true value to the buyer, but to maximize profits for the seller by increasing leverage.