I am no expert in MBSs and CDOs but I had a novice question. I know the argument that gets repeated time and time again in the press is that if a security is illiquid, then it's value cannot be defined. I'm just curious though, why isn't there another straightforward way to estimate the value of a security based on how much cash-flow it is generating and the loan default rate. From a basic business standpoint, if I have an object (security, business, asset) that is giving me cash every month, and I know the probability / rate at which this cash flow may decline in the future, then I should be able to estimate the value of my asset now. One could always take the WORST case scenario for the default rate (say 80% of all subprime mortgages will default) to estimate the value of these assets. Am I missing something completely? Or is that what people are doing to estimate their asset valuations now?