David Schawel

TSI: Skeptics Have it All Wrong

That statment is 100% factual - you may be unfamiliar with the meanings of MBS ratings. Call up a Moody's or Fitch ratings analyst - I talk with them frequently.

After going back and trying to "break" this bond - I raised the default rate by 50x (going from 1 CDR to 50 CDR) and even at this point the bond only loses 35% of its value. So even in that unrealistic example, the bond would still return more than the purchase price.