Not blaming the quants, just see them as the excuse & cover for these instruments. At the end of the day, a crap mortgage on overvalued real estate, is still, crap, no matter how you tranche it up and combine with other tranches while slapping on "insurance" that has close to 0% performing and a AAA rating. Speaking of MBSes, as far as I know, those were heavily used in commercial real estate. Well I do not know how it is in your country, but the commercial real estate situation here in USA is basically holding on due to the parties involved being afraid to make the move they eventually have to make. Quite similar to banks holding massive amounts of shadow inventory and holding off foreclosure proceedings for 2 years just to avoid starting the domino effect. I personally like some financial engineering concepts, such as tranches, which I am working to apply to some projects I am working on. But the CDO, MBS, etc., that is more fraud than anything.