Well put. At some point, the market structure/complexities intended to provide a benefit, became too difficult to manage and too easy to exploit. It's a tough b

Well put. At some point, the market structure/complexities intended to provide a benefit, became too difficult to manage and too easy to exploit. It's a tough balancing act. Was going to comment on your MBS statements, but this report has much better analysis: http://books.google.com/books?id=w9jIQuZIWPUC&lpg=PA59&ots=_5r25xkqtk&dq=mbs%20senior%20tranche%20default%20rates&pg=PA59#v=onepage&q&f=false http://books.google.com/books?id=w9jIQuZIWPUC&lpg=PA59&#... BBB corporates vs. AAA RMBS seem to have similar credit spreads (07/2008). Certain credit enhancements would make AAA RMBS/AAA corporates equal risk. AAA corporates have a default rate of 5 out of 10,000 - 07/2008. P.S. For the ggparent comment, here's a decent (from 2002) summary of pension fund investment restrictions by country: http://docs.google.com/viewer?a=v&q=cache:AdQpJCAi2wUJ:www.world-pensions.org/docus/investment%2520restriction%2520of%2520Pensions.doc+pension+fund+investment+restrictions&hl=en&gl=us&pid=bl&srcid=ADGEEShR6h9392LsFLcDLAOZWtJzVkALZbBNp8N25eCluJgAZuekmh0tzlZwzkuP1aSZQ8RLsycqeOy1qFEIEDYvdn_AHu5k4jS_N5zwJHwRfhGDe9j_BZYQB6yIKHK3_h6IJUAN2OHU&sig=AHIEtbSBlA8RrG-7JPNi1LP3WCH0IqWxvQ http://docs.google.com/viewer?a=v&q=cache:AdQpJCAi2wUJ:w...