Mmmm, Thornburg Billion Dollar Jumbolaya

As the campaign goes on we will hear the suave voice of Obama and the grizzled huff of McCain address an assortment of economic issues, and both men, with varying levels of enthusiasm or subtlety, will lay the blame for our economic state in the lap of the current president.

Standing right behind the current administration for verbal spankings will be Wall Street and the mortgage industry. No matter the party, expect largely the same line. Nowhere will the citizens be asked to step up, drop trousers, and take their corporal like good little troupers.

Which brings us to Thorburg Mortgage, announcer of mega-losses in the billion range (some of which are unrealized):

Based in Santa Fe, New Mexico, Thornburg specializes in large mortgages that typically go to buyers of more expensive homes who have good credit.

It proved vulnerable to tighter credit markets as investors stopped buying those home loans. Thornburg also suffered from demands for more collateral from its own lenders.

We sit here reading a Reuters write up of how they came to lose $3.31 billion in the first quarter, a staggering sum amounting to over $20 per share.

Results included a $1.54 billion write-down of the value of mortgage-backed securities and securitized loans Thornburg owns.

The company also realized a $651.6 million loss on the sale of some adjustable-rate mortgages, and had an unrealized $126.1 million loss on a separate adjustable-rate mortgage transaction.

Of course it's hard to ignore the word "mortage" in those losses, (duh, one says... it's in the company name) and how these mortgages and mortgage-back securities lost value.

My question is, "If the average person making payments on these mortgages were timely and not deliquent, would these securities be losing value?" I mean, what is the root cause of all of this?

Are we to assume, as the politicians do (so as not to offend the voter) that all mortgage payment/value issues are due to fraud and people being duped into contracts they did not want or understand? Are we to assume that the average person, or the average jumbo loan buyer, is unsophisticated on a level that creates losses at such a staggering level? To rephrase, are the losses due to fraud (on the part of mortgage types) or greed (by the home lusting population), and further, can the liquidity created by Wall Street (and the government) be responsible for this all?

Perhaps if Thornburg were awash in profits, and yet the sky was falling, we could forgive the homeowner their role in the shenaniganomics, but somehow the word "mortgages" kind of points a finger. There are a lot of mortgage and jumbo liars out there.

(Care to taste those 71 cent shares, which may yet face further value dilution?)