Mixed Metaphors

And other amusing horrors - commentary regarding the subprime mortgage crisis:

That's right: Knowing that subprime mortgages were pigs, bankers applied enough lipstick and rouge to make the loans attractive to investors. But the banks made these packages so attractive that they bought them from each other.

The misuse of CDOs reminds us of Mel Brooks' 1968 film and recent Broadway musical, "The Producers." You may recall the premise: Two con men oversell shares of a musical, intending to produce a flop, which will allow them to keep the money their investors will write off as losses. Unfortunately, the play is an inadvertent smash hit, ruining the con men's plans.

CDOs were invented so banks could transfer risk and earn fees in the process, but when banks started issuing multiple CDOs based on the same securities and buying them from each other, things got out of hand.

Those watching the subprime debacle and waiting for "the other shoe to drop" are in for an unpleasant surprise: it will soon be raining shoes.