CDOs and Recent Hedge Fund Woes

There has been much in the news recently regarding the implosion of two Bear Stearns hedge funds that were invested in CDOs that held sub-prime mortgages; mortgages to high risk borrowers that recently have been going into default at a much higher than had been anticipated rate. Below are links regarding the Bear Stearns blow-up as well as a decent explanation of what CDOs are and how they work.

Center of a Storm: How CDOs Work (WSJ subscription required. Alternative link here)
Entertaining Comments from Greg Newton
Bad News Letter from Bear Stearns (from WSJ)