It wasn't different this time either, was it? Wall Street's promise that pools of subprime mortgages would shower high yields on investors without the commensurate risk proved as nonsensical as the 1990s' pitch that dot-com companies thrived on clicks, not profits.

Even credit-rating companies like Standard & Poor's and Moody's Investors Service Inc. bought the idea that a few defaults of mortgages given to financially shaky home buyers wouldn't noticeably hurt overall returns.

The reality is an entire market in default. And the mess threatens to do for the credit markets what the collapse of dot-com shares did for the stock market in the three years beginning in 2000.

Securities based on subprime mortgages and other loans turned out to be the ultimate risk: They can't be traded, and their value is difficult if not impossible to calculate.

BNP Paribas SA, France's biggest bank, last week stopped withdrawals from three investment funds with subprime mortgage investments because it couldn't value them properly. At least the bank's customers can still hope. Two Bear Stearns Cos. funds that put money in subprime mortgages are headed for liquidation.

Investors continue to worry about how much other banks and investment firms may be exposed to high-risk mortgages. A Standard & Poor's index for seven Wall Street companies has declined 22 percent since June 13. Bear Stearns shares, included in the index, have plunged 29 percent, to $106, in that time - as of Wednesday.

The concern has spread to the entire stock market, though not to the same degree. The Standard & Poor's 500 index, a benchmark for the whole U.S. market, has dropped 8.1 percent since its record 1,553.08 on July 19.

This sudden drop in stocks confounded the computer programs many funds use to invest. Goldman Sachs Group Inc. said Monday it and other investors were putting about $3 billion into Goldman's Global Equity Opportunities Fund, which bets money using mathematical formulas.

Goldman insists this wasn't a bailout, but the fund's assets had dropped to $3.6 billion from $5 billion in a matter of days.

Central banks in the U.S., the European Union and Japan pumped $290 billion into the banking system last Thursday and Friday, trying to make sure the failure of high-risk mortgage securities wouldn't lead to financial distress in other markets.

While that may prevent panic, the low interest rates that led to excesses like subprime mortgages and rampant leveraged buyouts are gone.

In May, LBO maven Henry Kravis boasted about the "golden age" of private-equity firms. On Monday, his Kohlberg Kravis Roberts & Co. said the jump in borrowing costs might hurt the performance of its LBO funds. It's not improbable that KKR will postpone its planned offering of shares to the public.

Blackstone Group LP, another big buyout firm, last week said it had raised a $22 billion fund for takeovers. Since Blackstone will need many times that amount in borrowings to buy more companies, it may be awhile before that fund can be fully invested. Blackstone stock has declined to $24.57 since its public offering at $31 in June.

Fewer takeovers might be bad for stock prices. The promise of even poorly performing companies being bought at a premium has bolstered share prices for months.

Higher interest rates also could put a dent in stock buybacks, which have put a floor under prices. Many companies actually borrow money to buy their stock - a questionable endeavor that would become more problematic if the cost of doing it rises.

As they usually do when markets implode, many people are buying U.S. Treasury securities, considered the safest investment around. The demand has reduced the yield on 10-year Treasury notes to 4.71 percent Wednesday from 5.3 percent June 12.

There still are no sure-fire investments, however.

A significant increase in interest rates stemming from the fallout in subprime mortgages would push Treasury prices down, too.

David Pauly is a columnist for Bloomberg News. He can be reached at dpauly@bloomberg.net.