If someone loses huge on a leveraged spread to Treasuries the root cause of the spread widing is still the same. That being the precipitous drop in the asset backing the paper. In this case the asset is real estate. It's the biggest credit market in the world ya know. Without CDO markets knowing the ultimate price of RE, the future rates of forclosures ect., the paper is almost unpricable. I love the UBS quote after yesterdays write down: "In the last several months, continued speculation about the ultimate value of our subprime holdings -- which remains unknowable -- has been distracting," Wait till people go upside down in Tahoe and Palm Beach bro.