Interesting article... and it rings familiar.... I used to be a trustee for issues like that...
I remember buying an investment once for one of my trusts... it looked like a swap of US gvmt issues.. but underlying that US issue was another swap of Venezuelan debt... SO, someone was thinking they had US debt when they actually had Venezuelan debt... talk about getting fleeced if you are not looking at things..
MOST CMOs or CDOs were better than the one shown, but back in the 80s some of the mortgage issues by Housing districts (which were first mortgages) had up to 50% default rate... the Z bond and the lower ranked bonds got hit hard... but it is hard to determine what is good and what is bad.