I am sorry that you think it is ridiculous. However, it is the only reasonable way to think about bonds. They are not safer than a risk of default, and the spre

I am sorry that you think it is ridiculous. However, it is the only reasonable way to think about bonds. They are not safer than a risk of default, and the spread between bonds expresses exactly this (relatively). If bankers buy at a high price (low spread) when clearly they should not have bought at that price they are simply poor investors. No one forced them to buy - they could, and should, have bought something else. I don't see we disagree about the numbers? Of the 200 Billion, only about half of the losses were realized. The rest was pushed onto public books (as new bonds or as bailout-loans).