Residential and commercial-mortgage backed bonds tumbled after Treasury Secretary Henry Paulson said the government no longer plans to buy devalued mortgage assets, credit-default swap indexes suggest.


``No one in the market knows what to believe any more,'' David Castillo, a senior trader of structured-finance bonds at Further Lane Securities in San Francisco, said in an e-mail today. ``Things change on a daily basis.''

You can say that again, David. The government hasn't "bailed out" the private markets with its litany of ad hoc interventions this past year. It has destroyed them.

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