1 00:01:20,947 --> 00:01:23,283 Hiya, Frank. How are the wife and kids? 2 00:01:23,383 --> 00:01:24,584 You know, for you, I'm considering 3 00:01:24,684 --> 00:01:28,388 treasury bonds and utility stocks. Smoke? 4 00:01:28,455 --> 00:01:30,557 In the late '70s, banking wasn't a job 5 00:01:30,623 --> 00:01:33,126 you went into to make large sums of money. 6 00:01:34,600 --> 00:01:35,762 It was a ****ing snooze. 7 00:01:35,862 --> 00:01:37,630 How about those Mets? 8 00:01:37,731 --> 00:01:40,400 Filled with losers. Like selling insurance or 9 00:01:40,467 --> 00:01:41,801 accounting. 10 00:01:41,901 --> 00:01:43,360 And if banking was boring, 11 00:01:43,136 --> 00:01:45,805 then the bond department at the bank was straight-up comatose. 12 00:01:46,639 --> 00:01:48,410 We all know about bonds. 13 00:01:48,108 --> 00:01:50,243 You give them to your snot-nosed kid when he turns 15. 14 00:01:50,276 --> 00:01:52,278 Maybe when he's 30 he makes a hundred bucks. 15 00:01:52,379 --> 00:01:53,646 Boring. 16 00:01:53,747 --> 00:01:55,548 That is, until Lewis Ranieri came on the scene 17 00:01:55,615 --> 00:01:56,649 at Salomon Brothers. 18 00:02:02,622 --> 00:02:04,824 You might not know who he is, but he changed your life 19 00:02:04,924 --> 00:02:08,661 more than Michael Jordan, the iPod and YouTube put together. 20 00:02:10,563 --> 00:02:12,298 All right, gentlemen! Let's get some money in here! 21 00:02:12,399 --> 00:02:15,902 Let's make some money! What do you say? 22 00:02:15,969 --> 00:02:17,804 You see, Lewis didn't know it yet, 23 00:02:17,904 --> 00:02:19,806 but he had already changed banking forever 24 00:02:19,906 --> 00:02:21,107 with one simple idea. 25 00:02:21,908 --> 00:02:26,579 The mortgage-backed security. Or private-label MBS. 26 00:02:27,414 --> 00:02:29,249 You've got your average person's mortgage. 27 00:02:29,315 --> 00:02:30,750 Fixed rate, 30 years. 28 00:02:30,817 --> 00:02:34,154 Boring, safe, small payoff, right? But, 29 00:02:35,455 --> 00:02:38,158 when you have thousands of them all bundled together, 30 00:02:38,258 --> 00:02:41,795 suddenly the yield goes up but the risk is still small because, 31 00:02:41,861 --> 00:02:42,862 well, they're mortgages! 32 00:02:42,929 --> 00:02:44,330 And who the hell doesn't pay their mortgage? 33 00:02:44,431 --> 00:02:46,800 What exactly is the credit rating on this bond? 34 00:02:46,866 --> 00:02:49,703 This bond, gentlemen, is AAA-rated. 35 00:02:50,270 --> 00:02:53,173 This is exactly what the Michigan state pension fund has been looking for. 36 00:02:53,440 --> 00:02:54,941 I'll buy $20 million. 37 00:02:55,800 --> 00:02:57,477 - Oh, come on, live a little. - $25 million. 38 00:02:58,110 --> 00:03:00,980 The money came raining down, 39 00:03:01,470 --> 00:03:02,549 and for the first time, 40 00:03:02,649 --> 00:03:05,452 the banker went from the country club to the strip club. 41 00:03:14,127 --> 00:03:16,396 And America barely noticed as its number one industry 42 00:03:16,496 --> 00:03:18,565 became boring old banking. 43 00:03:22,235 --> 00:03:25,739 And then one day, almost 30 years later, in 2008, 44 00:03:26,973 --> 00:03:28,708 it all came crashing down. 45 00:03:31,845 --> 00:03:34,581 March. Bear Stearns was in a death spiral 46 00:03:34,681 --> 00:03:36,820 and the Fed brokered its sale. 47 00:03:36,182 --> 00:03:39,219 It's been called the worst financial crisis in modern times. 48 00:03:39,552 --> 00:03:43,823 Certainly the largest financial disaster in decades in this country, 49 00:03:43,890 --> 00:03:46,559 and perhaps the end of an era in American business. 50 00:03:47,270 --> 00:03:49,262 In the end, Lewis Ranieri's mortgage-backed security 51 00:03:49,362 --> 00:03:52,832 mutated into a monstrosity that collapsed the whole world economy. 52 00:03:53,366 --> 00:03:55,435 And none of the experts or leaders or talking heads 53 00:03:55,535 --> 00:03:56,836 had a clue it was coming. 54 00:03:58,338 --> 00:04:01,274 I'm guessing most of you still don't really know what happened. 55 00:04:01,775 --> 00:04:04,577 Yeah, you got a soundbite you repeat so you don't sound dumb, but come on. 56 00:04:04,678 --> 00:04:07,380 Our financial institutions are strong. 57 00:04:08,348 --> 00:04:10,750 But there were some who saw it coming. 58 00:04:10,850 --> 00:04:12,919 While the whole world was having a big old party, 59 00:04:13,190 --> 00:04:16,256 a few outsiders and weirdos saw what no one else could. 60 00:04:16,356 --> 00:04:19,926 Not me. I'm not a weirdo. I'm pretty ****ing cool. 61 00:04:20,260 --> 00:04:22,280 But we'll meet again later. 62 00:04:22,529 --> 00:04:25,265 These outsiders saw the giant lie at the heart of the economy. 63 00:04:25,365 --> 00:04:26,766 And they saw it by doing something 64 00:04:26,866 --> 00:04:29,636 the rest of the suckers never thought to do. 65 00:04:30,570 --> 00:04:31,905 They looked. 66 00:04:44,718 --> 00:04:47,530 During the 1930s, 67 00:04:48,655 --> 00:04:53,326 the housing market collapsed nationwide 68 00:04:54,728 --> 00:04:56,830 by roughly 80%. 69 00:04:56,930 --> 00:05:02,680 I mean, half of all mortgage debt was in default. 70 00:05:02,135 --> 00:05:04,804 And, I mean, there were very 71 00:05:05,939 --> 00:05:09,442 specific identifiers, extremely recognizable. 72 00:05:12,345 --> 00:05:13,413 I mean, for instance, 73 00:05:13,513 --> 00:05:16,750 one of the hallmarks of mania 74 00:05:17,830 --> 00:05:18,418 is the rapid rise 75 00:05:18,518 --> 00:05:20,587 in complexity and the rates of fraud. 76 00:05:20,653 --> 00:05:24,900 And did you know that they're going up? 77 00:05:43,610 --> 00:05:45,512 I've always been 78 00:05:45,612 --> 00:05:47,614 more comfortable alone. 79 00:05:54,888 --> 00:05:59,526 I believe maybe it's because of my glass eye. 80 00:06:01,961 --> 00:06:04,731 I lost the eye in a childhood illness. 81 00:06:09,690 --> 00:06:11,404 It separates me from people. 82 00:06:15,475 --> 00:06:17,844 And did you know that they are going 83 00:06:17,911 --> 00:06:19,450 up? 84 00:06:19,145 --> 00:06:22,649 The highest fraud rates since the 1930s. 85 00:06:22,716 --> 00:06:25,510 Hey, hey, it's okay. It's okay. 86 00:06:25,151 --> 00:06:27,870 No, I didn't know that. 87 00:06:31,324 --> 00:06:35,495 In 1933, the fourth year of the Great Depression. 88 00:06:35,662 --> 00:06:37,330 Let's wash it off and put it back in. 89 00:06:37,397 --> 00:06:39,366 You were playing so great, son. 90 00:06:39,499 --> 00:06:41,501 I even heard the coach say it. 91 00:06:42,669 --> 00:06:44,904 Can we just go home? 92 00:06:45,500 --> 00:06:49,175 Most social interactions are awkward for me and for the person. 93 00:06:49,242 --> 00:06:52,746 Even when I try to compliment someone, 94 00:06:52,846 --> 00:06:54,214 it comes out wrong. 95 00:06:55,115 --> 00:06:58,718 You have a very nice haircut. Did you do it yourself? 96 00:06:59,619 --> 00:07:00,787 What? 97 00:07:00,887 --> 00:07:03,390 No. No, I... 98 00:07:12,320 --> 00:07:13,867 I'm sorry. I'm just... 99 00:07:19,572 --> 00:07:20,740 I'm going on and on. 100 00:07:20,874 --> 00:07:22,575 My wife told me I need to share more. 101 00:07:24,544 --> 00:07:26,379 - That seems healthy. - Yeah. 102 00:07:39,159 --> 00:07:40,560 So do I get the job? 103 00:07:40,660 --> 00:07:42,996 I really think I could help your fund. 104 00:07:44,397 --> 00:07:45,765 Yeah. 105 00:07:45,832 --> 00:07:47,467 Yeah, sure. Go on. 106 00:07:50,170 --> 00:07:53,440 - You're... - David. Great. 107 00:07:53,506 --> 00:07:55,342 I guess I'll go find a desk. 108 00:07:55,442 --> 00:07:58,110 Is there anything you want me to work on for start... 109 00:08:01,810 --> 00:08:02,449 Yeah. 110 00:08:02,515 --> 00:08:04,351 You could let me know later. I could come back. 111 00:08:06,953 --> 00:08:11,491 Did you think it was strange when 112 00:08:11,591 --> 00:08:14,940 the tech bubble burst in 2001 113 00:08:14,160 --> 00:08:16,963 and the housing market in San Jose, 114 00:08:17,300 --> 00:08:19,265 the tech capital of the world, 115 00:08:20,767 --> 00:08:22,502 went up? 116 00:08:22,602 --> 00:08:24,637 - Wasn't that strange? - No. 117 00:08:24,704 --> 00:08:27,340 No, it's housing. Housing is always stable. 118 00:08:27,440 --> 00:08:28,475 Low risk. It's solid. 119 00:08:28,541 --> 00:08:30,510 That's the idea, yeah. 120 00:08:30,610 --> 00:08:32,345 I want you to get me 121 00:08:32,445 --> 00:08:35,648 the top 20 selling mortgage bonds. 122 00:08:35,715 --> 00:08:38,551 So you want to know what the top 20 selling mortgage bonds are? 123 00:08:38,651 --> 00:08:42,989 No, no, no, I want to know what mortgages are in each one. 124 00:08:44,391 --> 00:08:47,360 Okay, aren't those mortgages made up of... 125 00:08:47,460 --> 00:08:48,895 Wait, aren't those bonds made up 126 00:08:48,995 --> 00:08:51,310 of thousands and thousands of mortgages? 127 00:08:51,131 --> 00:08:52,565 Yeah. 128 00:08:56,636 --> 00:08:58,138 Right away, Dr. Burry. 129 00:09:17,190 --> 00:09:21,528 I am a nice guy all day long. 130 00:09:21,594 --> 00:09:24,264 Ask anyone, I'm a pleasure to work with. 131 00:09:26,199 --> 00:09:30,537 But the second my son screws up, I am... 132 00:09:31,204 --> 00:09:33,707 ...yelling at him just like my dad did to me. 133 00:09:37,430 --> 00:09:39,746 I hear the words that are coming out of my mouth and... 134 00:09:39,846 --> 00:09:42,615 Sorry I'm late! No cabs. 135 00:09:44,784 --> 00:09:46,386 So, get this. 136 00:09:47,120 --> 00:09:49,622 I met with this retail banker yesterday. 137 00:09:49,889 --> 00:09:52,292 I'm supposed to be getting him to invest in a fund, 138 00:09:52,392 --> 00:09:53,727 but instead 139 00:09:53,793 --> 00:09:56,696 I start grilling him about overdraft penalties 140 00:09:56,763 --> 00:09:59,766 and how his bank will let a customer write 10-12 checks 141 00:09:59,866 --> 00:10:01,101 before they tell them they're overdrawn. 142 00:10:01,201 --> 00:10:05,105 And this creep is making billions off screwing over people this way. 143 00:10:05,205 --> 00:10:06,973 And I'm getting madder and madder. 144 00:10:07,730 --> 00:10:10,443 And I ask him, I look him in the face and I say, 145 00:10:10,543 --> 00:10:12,379 "How can you sleep at night 146 00:10:12,879 --> 00:10:16,316 "knowing that you are ripping off working people?" 147 00:10:16,416 --> 00:10:18,118 And you know what he did? He left. 148 00:10:18,218 --> 00:10:20,920 He just walks out of the lunch, doesn't say a word. 149 00:10:20,987 --> 00:10:21,988 What the **** is that? 150 00:10:22,880 --> 00:10:24,424 Who's ****ed up in that scenario? Am I? 151 00:10:24,491 --> 00:10:26,960 Or is this douchebag, who leaves me hanging? 152 00:10:27,600 --> 00:10:28,294 Is he the ****ed up one? 153 00:10:28,395 --> 00:10:31,164 We have talked about this numerous times. 154 00:10:31,264 --> 00:10:34,401 You can't come in late and hijack the entire session. 155 00:10:34,467 --> 00:10:35,935 What do you mean? I didn't hijack the meeting. 156 00:10:36,200 --> 00:10:38,338 - Did I hijack the session? - Yeah. 157 00:10:38,805 --> 00:10:41,274 - What do you do? - I'm in commodities. 158 00:10:41,341 --> 00:10:42,642 Good luck with that. 159 00:10:42,742 --> 00:10:46,312 Mark, I know you suffered a terrible loss. 160 00:10:46,413 --> 00:10:47,814 Maybe you want to talk about that. 161 00:10:47,914 --> 00:10:48,948 I don't talk about that. 162 00:10:49,150 --> 00:10:50,450 Hold on. 163 00:10:50,517 --> 00:10:51,851 Hold on... 164 00:10:51,951 --> 00:10:54,788 Shit, I have to take this. Sorry. Sorry. 165 00:10:55,689 --> 00:10:57,824 No... I don't care, Porter. 166 00:10:57,924 --> 00:10:59,492 This guy's whole business is built on ripping people off. 167 00:10:59,592 --> 00:11:01,127 How long can that last? 168 00:11:02,629 --> 00:11:03,797 Bye, everybody! 169 00:11:04,864 --> 00:11:06,533 95... 170 00:11:06,800 --> 00:11:08,935 That's 30 days late... Sixty days late... 171 00:11:11,371 --> 00:11:13,873 They pay on time... 172 00:11:16,776 --> 00:11:18,378 These FICO scores... 173 00:11:24,117 --> 00:11:27,120 Late. And they caught up on their payments... 174 00:11:27,187 --> 00:11:28,688 Another 30 days late... 175 00:11:28,788 --> 00:11:32,250 LTV, 95... LTV, 90... They caught up on their payments... 176 00:11:32,125 --> 00:11:33,660 Sixty days late? Jesus! 177 00:11:33,727 --> 00:11:35,862 LTV, 110? I've never heard of that! 178 00:11:35,962 --> 00:11:37,297 Thirty days late, rate adjusts... 179 00:11:38,298 --> 00:11:39,532 In '07 rate adjusts... 180 00:11:39,632 --> 00:11:40,800 In '06 rate adjusts... 181 00:11:40,900 --> 00:11:43,203 95... 90... Jesus! 182 00:11:44,904 --> 00:11:46,539 He hasn't moved all day. 183 00:11:46,639 --> 00:11:48,975 He does this every few days. 184 00:11:49,420 --> 00:11:50,710 He hasn't spoken to me since he hired me. 185 00:11:50,810 --> 00:11:52,212 Maybe the LTV's at... High-risk, 186 00:11:52,312 --> 00:11:54,547 interest-only... I never heard of that mortgage history, 187 00:11:54,647 --> 00:11:57,384 I never heard of that... How? 188 00:11:57,484 --> 00:11:58,752 Michael, how are you, guy? 189 00:11:58,852 --> 00:12:01,888 Lawrence, I found something really interesting. 190 00:12:01,988 --> 00:12:03,890 Great, Michael. Whenever you find something interesting, 191 00:12:03,990 --> 00:12:05,191 we all tend to make money. 192 00:12:05,258 --> 00:12:08,940 - What stock are you valuing? - No, no, no, no. No stocks. 193 00:12:08,194 --> 00:12:10,230 I want to short the housing market. 194 00:12:11,664 --> 00:12:14,334 Really? But the housing market is rock solid. 195 00:12:14,834 --> 00:12:16,236 Greenspan just said 196 00:12:16,336 --> 00:12:18,872 bubbles are regional, defaults are rare. 197 00:12:19,500 --> 00:12:21,107 Tell them I'll be there in a minute. 198 00:12:21,207 --> 00:12:23,900 - Say again? - Look, look... 199 00:12:23,760 --> 00:12:24,911 Greenspan's wrong. 200 00:12:25,110 --> 00:12:28,415 I don't think you mean to do this, but sometimes you sound very 201 00:12:28,515 --> 00:12:30,784 dismissive and superior. 202 00:12:30,884 --> 00:12:32,520 It's a fact. Greenspan's wrong. 203 00:12:32,118 --> 00:12:34,454 I don't know how else you want me to say... 204 00:12:34,554 --> 00:12:35,922 Look, Michael. 205 00:12:36,220 --> 00:12:37,624 Metro Capital backed you four years ago 206 00:12:37,724 --> 00:12:39,526 when you were a doctor with a 207 00:12:39,592 --> 00:12:41,928 dinky webpage and some inheritance money. 208 00:12:42,280 --> 00:12:43,290 We've all done very well. 209 00:12:43,960 --> 00:12:44,230 Why don't you just stick with stocks? 210 00:12:44,297 --> 00:12:46,433 Look. You know me. I, I, I... 211 00:12:46,533 --> 00:12:50,270 I look for value wherever it can be found. 212 00:12:50,370 --> 00:12:51,438 And the fact is 213 00:12:51,538 --> 00:12:54,741 that these mortgage-backed securities are filled 214 00:12:54,874 --> 00:12:58,278 with extremely risky subprime adjustable-rate loans. 215 00:12:58,378 --> 00:13:00,880 And when the majority of the adjustable rates 216 00:13:00,947 --> 00:13:03,183 kick in, in '07, 217 00:13:03,383 --> 00:13:04,551 they will begin to fail. 218 00:13:04,617 --> 00:13:07,954 And if they fail above 15%, the whole bond is worthless. 219 00:13:08,540 --> 00:13:10,190 Michael, just take a beat. 220 00:13:10,290 --> 00:13:11,491 We'll talk about this later, okay? 221 00:13:11,591 --> 00:13:14,627 Lawrence, please, don't patronize me. Listen... 222 00:13:14,728 --> 00:13:16,162 Mortgage-backed securities. 223 00:13:16,262 --> 00:13:18,965 - It, it, it... - Subprime loans. Tranches. 224 00:13:19,566 --> 00:13:21,201 It's pretty confusing, right? 225 00:13:21,301 --> 00:13:23,937 Does it make you feel bored? Or stupid? 226 00:13:24,400 --> 00:13:26,306 Well, it's supposed to. 227 00:13:26,406 --> 00:13:27,974 Wall Street loves to use confusing terms 228 00:13:28,740 --> 00:13:30,744 to make you think only they can do what they do. 229 00:13:31,770 --> 00:13:32,278 Or, even better, 230 00:13:34,347 --> 00:13:36,683 It's only a matter of time before someone else sees this investment. 231 00:13:36,783 --> 00:13:38,485 We have to act now! 232 00:13:38,551 --> 00:13:40,820 How do you know the bonds are worthless? 233 00:13:40,920 --> 00:13:43,123 Aren't they filled with ****ing thousands 234 00:13:43,189 --> 00:13:44,324 of pages of mortgages? 235 00:13:44,424 --> 00:13:46,659 I read them. 236 00:13:46,760 --> 00:13:48,661 - You read them? - I read... Yes. 237 00:13:48,762 --> 00:13:51,965 No one reads them. Only the lawyers who put them together read them. 238 00:13:52,320 --> 00:13:56,770 Look, I don't think that they even know what they've made. 239 00:13:56,870 --> 00:14:00,140 The housing market is propped up on these 240 00:14:00,440 --> 00:14:03,109 bad loans, and I'm... 241 00:14:03,176 --> 00:14:05,211 It's a time bomb, and I want to short it. 242 00:14:05,311 --> 00:14:07,580 Through what instrument, Michael? 243 00:14:07,681 --> 00:14:10,684 There are no insurance contracts or options for mortgage bonds. 244 00:14:10,750 --> 00:14:13,453 - The bonds are too stable. - Lawrence... 245 00:14:16,756 --> 00:14:20,593 This is what I'm gonna do. I am gonna get a bank 246 00:14:20,960 --> 00:14:22,996 to make me one. 247 00:14:23,596 --> 00:14:25,298 And then 248 00:14:26,132 --> 00:14:27,834 I'm gonna buy it. 249 00:14:28,468 --> 00:14:31,400 I don't want that kind of business. 250 00:14:31,710 --> 00:14:33,740 Money is not money. That's bad money. 251 00:14:34,407 --> 00:14:36,609 Hey! Excuse me! 252 00:14:38,110 --> 00:14:40,914 Let me ask you this. What company treats its customers 253 00:14:41,140 --> 00:14:43,583 that shittily and succeeds? 254 00:14:44,484 --> 00:14:46,319 Fine. Okay, Goldman. You're right. 255 00:14:46,386 --> 00:14:47,721 Mark Baum had built his career 256 00:14:47,787 --> 00:14:49,856 on never assuming anyone or any company 257 00:14:49,923 --> 00:14:51,591 was legit without proving it. 258 00:14:51,691 --> 00:14:53,193 When he was a kid he excelled at studying 259 00:14:53,259 --> 00:14:55,328 the Talmud in Yeshiva. Whatever. 260 00:14:55,395 --> 00:14:57,330 But one day his rabbi told his mom why. 261 00:14:58,498 --> 00:15:01,501 Paul is a fine boy, and Mark is an excellent student 262 00:15:01,601 --> 00:15:04,204 of the Torah and the Talmud. 263 00:15:04,270 --> 00:15:06,239 Then what's the problem, rabbi? 264 00:15:06,339 --> 00:15:09,509 It's the reason Mark is studying so hard. 265 00:15:10,343 --> 00:15:13,513 He's looking for inconsistencies in the word of God! 266 00:15:16,249 --> 00:15:18,418 So has he found any? 267 00:15:19,519 --> 00:15:22,756 Later, Baum started his own fund on Wall Street. 268 00:15:22,822 --> 00:15:24,290 He had an amazing nose for bullshit. 269 00:15:24,357 --> 00:15:26,359 And he wasn't afraid to let anyone know when and where 270 00:15:26,426 --> 00:15:29,620 the bull had gone number two. 271 00:15:29,129 --> 00:15:30,764 But then a tragedy happened to Mark, 272 00:15:30,830 --> 00:15:32,298 and it turned his world view dark 273 00:15:32,399 --> 00:15:34,734 and ready to believe the whole system was a lie. 274 00:15:34,801 --> 00:15:36,369 Hold on. 275 00:15:36,436 --> 00:15:39,272 It's Cynthia. I'll be in the office in 20 minutes. 276 00:15:40,206 --> 00:15:41,408 Hi, honey. 277 00:15:42,842 --> 00:15:46,546 The therapist called. You did it again. 278 00:15:46,946 --> 00:15:49,683 There were no cabs. What was I supposed to do? 279 00:15:49,783 --> 00:15:51,451 I worry about you, Mark. 280 00:15:51,551 --> 00:15:52,852 At least I went. 281 00:15:54,154 --> 00:15:56,122 You're running around like you have to right 282 00:15:56,222 --> 00:15:58,580 - every wrong in the world. - Okay. 283 00:15:58,158 --> 00:15:59,325 You're so angry. 284 00:15:59,426 --> 00:16:00,827 Fine. You know what? 285 00:16:00,927 --> 00:16:03,830 I'm a mean guy and I'm pissed off. 286 00:16:03,930 --> 00:16:05,832 But it is a shit storm out here, sweetie. 287 00:16:05,932 --> 00:16:09,235 You have no idea the kind of crap people are pulling. 288 00:16:09,302 --> 00:16:12,500 And everyone's walking around like they're in a goddamn Enya video. 289 00:16:13,673 --> 00:16:15,141 They're all getting screwed, you know. 290 00:16:15,241 --> 00:16:17,811 You know what they care about? They care about the ballgame. 291 00:16:17,877 --> 00:16:20,780 Or they care about what actress just went into rehab. 292 00:16:20,847 --> 00:16:22,882 I think you should try medication. 293 00:16:22,982 --> 00:16:26,152 No, no. We agreed. If it interfered with work. 294 00:16:26,252 --> 00:16:28,880 You hate Wall Street. Maybe it's time to quit. 295 00:16:28,588 --> 00:16:30,523 - I love my job. - You hate your job. 296 00:16:30,623 --> 00:16:32,659 - I love my job. - You're miserable. 297 00:16:32,726 --> 00:16:34,728 I love my job. I love my job, honey. 298 00:16:35,695 --> 00:16:36,996 Mark... 299 00:16:38,198 --> 00:16:41,301 I am sad every day about what happened. 300 00:16:41,368 --> 00:16:44,704 I know you must feel the same, but you never show it. 301 00:16:50,977 --> 00:16:53,480 I know how close you were to your brother. 302 00:16:56,850 --> 00:16:57,917 Paul. 303 00:16:58,985 --> 00:17:00,620 Where'd you go, Paul? 304 00:17:05,859 --> 00:17:07,930 Paul! 305 00:17:12,766 --> 00:17:15,535 Every day I think you're gonna talk about it, but you never do. 306 00:17:19,406 --> 00:17:23,176 Will you at least think about the idea of making a change? 307 00:17:23,243 --> 00:17:26,790 Fine. Fine. Honey, you know what? I will consider it. 308 00:17:26,179 --> 00:17:29,549 But, honestly, Cynthia. I'm okay. I really am. 309 00:17:29,649 --> 00:17:31,584 Hey, hey, hey! No, no. 310 00:17:31,685 --> 00:17:35,550 My cab. That's my cab. That's my cab. That is my cab. 311 00:17:35,121 --> 00:17:36,723 - Schmuck. **** you. - **** you. 312 00:17:36,790 --> 00:17:38,491 - **** you. - **** you. 313 00:17:39,492 --> 00:17:40,960 I'll call you later. 314 00:17:48,368 --> 00:17:52,439 I want to buy swaps on mortgage bonds. 315 00:17:52,539 --> 00:17:54,874 A credit default swap that will pay off 316 00:17:55,909 --> 00:17:58,411 if the underlying bond fails. 317 00:17:59,145 --> 00:18:00,747 You want to bet against the housing market? 318 00:18:00,814 --> 00:18:02,782 - Yes. - Why? 319 00:18:02,882 --> 00:18:04,500 Those bonds only fail 320 00:18:04,117 --> 00:18:06,586 if millions of Americans don't pay their mortgages. 321 00:18:06,686 --> 00:18:09,890 That's never happened in history. 322 00:18:09,155 --> 00:18:12,920 If you'll excuse me, Dr. Burry, it seems like a foolish investment. 323 00:18:12,158 --> 00:18:14,928 Well, based on prevailing sentiment 324 00:18:14,994 --> 00:18:17,630 of the market and banks in popular culture, 325 00:18:17,130 --> 00:18:19,432 yes, it's a foolish investment. 326 00:18:19,532 --> 00:18:22,200 But... Everyone's wrong. 327 00:18:23,603 --> 00:18:25,105 That's a good one. 328 00:18:27,440 --> 00:18:29,109 This is Wall Street, Dr. Burry. 329 00:18:29,175 --> 00:18:31,144 If you offer us free money, we are going to take it. 330 00:18:31,244 --> 00:18:35,849 My one concern is that when the bonds fail, 331 00:18:36,983 --> 00:18:40,553 I want to be certain of payment 332 00:18:40,620 --> 00:18:43,390 in case of solvency issues with your bank. 333 00:18:44,391 --> 00:18:46,760 I'm sorry, are you for real? 334 00:18:46,826 --> 00:18:48,461 You wanna bet against the housing market 335 00:18:48,561 --> 00:18:49,863 and you're worried we won't pay you? 336 00:18:49,963 --> 00:18:51,564 Yes, that's correct. 337 00:19:02,876 --> 00:19:04,778 ...unless the market crashes. 338 00:19:04,878 --> 00:19:07,113 The market on housing's never gonna crash 339 00:19:07,180 --> 00:19:09,983 because it's so solid right now. 340 00:19:10,500 --> 00:19:12,819 I mean, who doesn't pay their mortgages? 341 00:19:20,260 --> 00:19:21,610 Dr. Burry, 342 00:19:21,161 --> 00:19:23,496 we could work out a pay-as-we-go structure 343 00:19:23,596 --> 00:19:25,598 that would pay out if the bonds fail. 344 00:19:25,665 --> 00:19:27,233 But it would also apply to your payments 345 00:19:27,233 --> 00:19:29,202 if the value of the mortgage bond goes up. 346 00:19:29,302 --> 00:19:32,500 You'd have to pay us monthly premiums. 347 00:19:32,720 --> 00:19:34,808 Is that acceptable, Dr. Burry? 348 00:19:37,243 --> 00:19:38,611 Yes. Yes. 349 00:19:39,612 --> 00:19:42,716 I have prospectuses on six mortgage-backed 350 00:19:42,816 --> 00:19:44,984 securities I want to short. 351 00:19:49,422 --> 00:19:51,191 Majority of the mortgages... 352 00:20:02,502 --> 00:20:05,380 I don't see us losing any money on these at all. 353 00:20:18,518 --> 00:20:21,187 Dr. Burry, these should be fine. 354 00:20:21,254 --> 00:20:23,189 Yeah. We're prepared to sell you $5 million 355 00:20:23,256 --> 00:20:25,158 in credit default swaps on these mortgage bonds. 356 00:20:26,359 --> 00:20:27,761 Can we make it $100 million? 357 00:20:30,663 --> 00:20:33,330 Absolutely, we can make it $100 million. 358 00:20:34,601 --> 00:20:37,837 We'll be in touch, send some paperwork over. 359 00:20:41,307 --> 00:20:43,910 I like these cups. Can I take one for my son? 360 00:20:43,977 --> 00:20:45,745 Have... Yes. Yes. 361 00:20:45,845 --> 00:20:47,313 Thank you. 362 00:20:47,414 --> 00:20:48,782 Have two. 363 00:21:08,768 --> 00:21:11,771 Is there any way to do $200 million? 364 00:21:13,239 --> 00:21:15,875 I mean, we can. But are you sure? 365 00:21:16,776 --> 00:21:19,946 Absolutely. Absolutely, we can do that. 366 00:21:33,660 --> 00:21:37,300 We do different projects. We do gardening. 367 00:21:37,130 --> 00:21:38,832 The bonds I'd like to bet against. 368 00:21:40,600 --> 00:21:42,102 It's not bad seeing yourself on the big screen. 369 00:21:42,168 --> 00:21:43,169 It's very cool. 370 00:21:44,204 --> 00:21:47,907 I ordered the 24-ounce T-bone, which was choice. 371 00:21:47,974 --> 00:21:49,442 - I went for volume... - Yeah. 372 00:21:49,509 --> 00:21:51,144 ...rather than prime. 373 00:21:51,211 --> 00:21:53,913 I went for subprime, and the gist was... 374 00:22:01,221 --> 00:22:03,523 Can I have like, lettuce, tomato, no onions? 375 00:22:04,357 --> 00:22:07,660 So, no onions. Lettuce, tomato, Thousand Island okay? 376 00:22:07,761 --> 00:22:08,762 Yeah. 377 00:22:15,802 --> 00:22:17,504 Hey, Randall! What's with the Dom? 378 00:22:17,570 --> 00:22:19,472 Bonuses aren't for three months. 379 00:22:19,539 --> 00:22:23,510 We just sold $200 million in credit swaps for mortgage bonds. 380 00:22:23,576 --> 00:22:25,745 Some fund manager from California. 381 00:22:25,879 --> 00:22:27,213 It's ****ing crazy, right? 382 00:22:27,313 --> 00:22:28,381 A whole new way to make money, Doug. 383 00:22:28,481 --> 00:22:30,717 Wait, wait. I didn't know there were swaps on mortgages. 384 00:22:30,817 --> 00:22:33,386 There are now. We made it for him. 385 00:22:33,486 --> 00:22:35,155 He must have gone off his Zoloft or something. 386 00:22:35,221 --> 00:22:36,556 I don't know. 387 00:22:36,656 --> 00:22:38,425 - Want to join? No? - Just a second. 388 00:22:39,659 --> 00:22:41,610 Hey, Jared. 389 00:22:41,161 --> 00:22:42,595 Did you hear about the deal that Randall just did 390 00:22:42,696 --> 00:22:43,897 with some fund manager? 391 00:22:43,997 --> 00:22:45,765 Randall? Bullshit. 392 00:22:46,232 --> 00:22:48,680 He's a foot soldier. I'm sure it's a shit deal. 393 00:22:48,168 --> 00:22:49,402 No, it's for real. 394 00:22:50,603 --> 00:22:52,380 I told you we'd meet later. 395 00:22:52,105 --> 00:22:54,541 Unfortunately, it's in a place like this which I would never be. 396 00:22:54,607 --> 00:22:57,277 I never hung out with these idiots after work, ever. 397 00:22:57,377 --> 00:22:59,179 I had fashion friends. 398 00:22:59,579 --> 00:23:02,916 Apparently, this guy wanted $200 mil in credit default swaps. 399 00:23:03,160 --> 00:23:04,751 Randall made the sale. Can you believe it? 400 00:23:04,851 --> 00:23:07,530 Somebody shorted $200 mil on mortgage bonds? 401 00:23:07,120 --> 00:23:10,557 That was just with Deutsche. Word is he hit half the town. 402 00:23:11,424 --> 00:23:12,559 How much in total? 403 00:23:12,625 --> 00:23:14,361 $1.3 billion. 404 00:23:14,427 --> 00:23:18,264 What? That's pretty much all of Scion's liquidity. 405 00:23:18,365 --> 00:23:20,433 Michael, this is highly distressing. 406 00:23:20,533 --> 00:23:21,935 Lawrence, that is not 407 00:23:22,350 --> 00:23:24,571 all of our liquidity. 408 00:23:24,637 --> 00:23:25,872 And I'm not certain 409 00:23:25,939 --> 00:23:28,141 that you really understand this trade. 410 00:23:28,274 --> 00:23:29,309 This is a certainty. 411 00:23:29,409 --> 00:23:32,479 Mike, I consider myself a mentor to you. 412 00:23:32,579 --> 00:23:36,416 But our company is not comfortable with this investment. Am I being clear? 413 00:23:36,483 --> 00:23:38,752 Lawrence, I have full autonomy 414 00:23:38,818 --> 00:23:41,755 when it comes to investment strategy. 415 00:23:41,821 --> 00:23:42,956 You can read our agreement. 416 00:23:43,560 --> 00:23:46,393 Do not throw our inception agreement in my face, Michael. 417 00:23:46,459 --> 00:23:47,560 We had an underlying 418 00:23:47,627 --> 00:23:50,230 understanding you wouldn't act like a goddamn crazy man. 419 00:23:50,296 --> 00:23:51,898 This is not crazy. 420 00:23:51,965 --> 00:23:53,433 It's all very logical. 421 00:23:53,500 --> 00:23:55,735 So, now we pay up premiums on these swaps 422 00:23:56,302 --> 00:23:59,720 against the housing market until the mortgages fail? 423 00:23:59,139 --> 00:24:00,807 In other words, we lose millions 424 00:24:00,940 --> 00:24:03,610 until something that's never happened before happens? 425 00:24:07,480 --> 00:24:08,481 That's correct. 426 00:24:42,150 --> 00:24:43,283 Hello, Mark Baum. 427 00:24:43,350 --> 00:24:45,452 Oh, hey, Kathy, you busted me. 428 00:24:45,518 --> 00:24:47,554 - I had a personal thing this afternoon. - I'm not your babysitter. 429 00:24:47,654 --> 00:24:50,290 If FrontPoint makes money for Morgan Stanley, I'm happy. 430 00:24:50,357 --> 00:24:52,659 Okay. Hey, did I hear you're expecting? 431 00:24:52,726 --> 00:24:54,127 We're expecting to be expecting. 432 00:24:54,194 --> 00:24:55,862 IVF's are cleaning us out but we're staying positive... 433 00:24:55,962 --> 00:24:57,464 That's exciting! 434 00:25:01,301 --> 00:25:03,370 So get this. Cynthia... 435 00:25:03,470 --> 00:25:07,707 Guys. Cynthia wants me to quit and open a B&B in Vermont. 436 00:25:07,807 --> 00:25:11,177 That sounds great. I'd love to see Mark Baum run a bed and breakfast. 437 00:25:11,244 --> 00:25:13,213 Like, "Here's your steel-cut oatmeal, ***hole." 438 00:25:13,313 --> 00:25:15,882 Mark refused to kiss the ring of the people with the checkbooks, 439 00:25:15,982 --> 00:25:19,850 so he had to set up his fund under Morgan Stanley's umbrella. 440 00:25:19,719 --> 00:25:22,822 His small team reflected his distrust of the system. 441 00:25:22,889 --> 00:25:24,324 You guys are sick. You're sick. 442 00:25:24,424 --> 00:25:26,559 She says this job is making me unhappy. 443 00:25:26,659 --> 00:25:27,694 But you're happy when you're unhappy. 444 00:25:27,761 --> 00:25:29,262 I am happy when I'm unhappy. 445 00:25:29,362 --> 00:25:30,363 Vinnie Daniel. 446 00:25:30,430 --> 00:25:31,564 You know how to make a muffin? 447 00:25:31,664 --> 00:25:33,366 - Mark's numbers guy. - Do you even know how 448 00:25:33,433 --> 00:25:34,934 - to do laundry? Make a bed? - Okay... 449 00:25:35,100 --> 00:25:37,604 Vinnie lost his father to a violent crime when he was young. 450 00:25:37,704 --> 00:25:39,539 Just like Mark, he didn't talk about it. 451 00:25:39,606 --> 00:25:40,874 I don't talk about that. 452 00:25:40,940 --> 00:25:43,276 Cynthia's no joke. She could actually make him move to Vermont. 453 00:25:43,376 --> 00:25:45,450 I mean, she made me start wearing a seatbelt. 454 00:25:45,111 --> 00:25:46,846 - Hey, you want me to... - Porter Collins. 455 00:25:46,946 --> 00:25:49,115 Former Olympic rower who went to Brown. 456 00:25:49,215 --> 00:25:50,884 He worked with Baum at a previous firm 457 00:25:50,950 --> 00:25:52,886 and couldn't figure out why no one listened to Baum. 458 00:25:52,952 --> 00:25:55,550 The guy with all the good ideas. 459 00:25:55,121 --> 00:25:56,923 Sorry. I think you have the wrong FrontPoint. 460 00:25:57,570 --> 00:25:59,859 'Cause there is another FrontPoint in this same building that is bonds. 461 00:25:59,893 --> 00:26:02,629 And Danny Moses. The optimist of the bunch. 462 00:26:03,563 --> 00:26:04,764 And a hell of a trader. 463 00:26:04,864 --> 00:26:07,967 Which is the only reason they put up with his bullshit optimism. 464 00:26:08,680 --> 00:26:09,302 That was a weird call. 465 00:26:09,402 --> 00:26:12,706 You take longer with a wrong number than anybody else. 466 00:26:12,772 --> 00:26:15,408 It was this guy from Deutsche 467 00:26:15,475 --> 00:26:18,780 who was talking about shorting housing bonds. 468 00:26:19,446 --> 00:26:21,915 And then in the middle of the call I realized he had the wrong FrontPoint. 469 00:26:21,981 --> 00:26:24,317 And then... 'Cause he wanted the one on the 8th floor. 470 00:26:24,984 --> 00:26:26,920 He wanted to short housing bonds? 471 00:26:26,986 --> 00:26:28,540 That happens like five times a day 472 00:26:28,121 --> 00:26:29,589 that somebody gets the wrong FrontPoint. 473 00:26:29,656 --> 00:26:31,825 - We should change our name. - Wait. Wait. 474 00:26:31,925 --> 00:26:33,893 He wanted to short housing bonds? 475 00:26:34,160 --> 00:26:35,962 Who bets against housing? 476 00:26:36,930 --> 00:26:39,432 - What's the ABX at? - What's ABX? 477 00:26:39,499 --> 00:26:42,335 It tracks subprime mortgage bond value. Go back to sleep. 478 00:26:42,769 --> 00:26:45,710 The ABX is at... 479 00:26:45,171 --> 00:26:48,441 Wow, it's down! It's down three points since last year. 480 00:26:48,508 --> 00:26:50,777 That's weird. I haven't heard a peep about that. 481 00:26:50,844 --> 00:26:51,911 What was this guy's name? 482 00:26:51,978 --> 00:26:54,114 Jared Vennett. Vennett. 483 00:26:54,180 --> 00:26:56,449 That's right. These lucky sons of *****es 484 00:26:56,516 --> 00:26:59,285 caught wind of one of the best trades in Wall Street history 485 00:26:59,352 --> 00:27:00,954 from a wrong number. 486 00:27:01,210 --> 00:27:03,289 They should have paid 10% to my ****stick assistant. 487 00:27:03,356 --> 00:27:05,692 His name was Jared Vennett. Vennett. 488 00:27:05,792 --> 00:27:07,627 Jared Vennett from Deutsche. Sounded very sketchy. 489 00:27:07,694 --> 00:27:08,695 Sounds like a douchebag. 490 00:27:09,529 --> 00:27:11,331 Do you smell that? 491 00:27:11,431 --> 00:27:12,766 Do you smell that? 492 00:27:12,866 --> 00:27:14,134 I smell money. 493 00:27:14,934 --> 00:27:16,336 This is your basic mortgage... 494 00:27:20,140 --> 00:27:22,308 Okay, hi. How are you? 495 00:27:22,842 --> 00:27:24,440 Have a seat. 496 00:27:24,144 --> 00:27:26,880 Okay, Mr. Vennett from Deutsche Bank. What do we have? 497 00:27:31,451 --> 00:27:33,190 There you go. 498 00:27:36,489 --> 00:27:39,250 So, how many people have you talked to about this trade? 499 00:27:39,125 --> 00:27:41,861 A few. There's definitely some interest. 500 00:27:41,961 --> 00:27:43,363 - No! - My boss would have my ***... 501 00:27:43,463 --> 00:27:44,864 - N.O.! - You crazy, Jared? 502 00:27:44,964 --> 00:27:46,499 - Get lost. - **** you. 503 00:27:47,233 --> 00:27:50,360 Which is why you're here talking to us, a wrong number. 504 00:27:50,136 --> 00:27:51,538 Sounds like there's a lot of interest. 505 00:27:51,638 --> 00:27:53,973 All right. A few people have invited us in 506 00:27:54,400 --> 00:27:56,409 just to laugh at me on this deal. Is that you? 507 00:27:56,509 --> 00:27:57,510 Is that what this is? 508 00:27:57,577 --> 00:27:58,645 That's not what this is. 509 00:27:58,712 --> 00:28:00,513 That's just how Mark is. 510 00:28:00,580 --> 00:28:01,881 - Let's see what you got. - I'm sorry. 511 00:28:01,981 --> 00:28:03,650 You smell that? What is that? 512 00:28:03,750 --> 00:28:05,185 - What? - What's that smell? 513 00:28:05,585 --> 00:28:07,654 - Your cologne? - No. 514 00:28:09,989 --> 00:28:12,692 - Opportunity. - No. Money. 515 00:28:12,759 --> 00:28:14,600 Okay. 516 00:28:14,160 --> 00:28:15,695 - I smell money. - Okay. 517 00:28:16,196 --> 00:28:18,865 - Chris, God damn it. - Sorry. 518 00:28:22,680 --> 00:28:24,504 This is your basic mortgage bond. 519 00:28:24,571 --> 00:28:26,840 All right? The originals were simple. 520 00:28:26,906 --> 00:28:30,577 They were just thousands of AAA mortgages bundled together, 521 00:28:30,677 --> 00:28:32,412 guaranteed by the U.S. government. 522 00:28:32,512 --> 00:28:34,347 The modern ones are different. 523 00:28:34,414 --> 00:28:37,350 They're private. And they're made up of layers of tranches. 524 00:28:42,589 --> 00:28:45,250 The highest level, AAA, is getting paid first. 525 00:28:45,910 --> 00:28:46,793 The lowest rated, B, is getting paid last, 526 00:28:46,793 --> 00:28:48,261 taking on defaults first. 527 00:28:48,361 --> 00:28:51,310 Now, obviously, if you're buying B's, you could make more money. 528 00:28:51,970 --> 00:28:52,265 But they're a little risky. 529 00:28:52,365 --> 00:28:54,534 Sometimes they fail. 530 00:28:55,769 --> 00:28:57,103 Chris? 531 00:29:00,940 --> 00:29:03,209 Somewhere along the line, these B's and BB's 532 00:29:03,276 --> 00:29:04,744 went from a little risky 533 00:29:04,811 --> 00:29:07,247 to dog shit. Where's the trash? 534 00:29:07,313 --> 00:29:08,314 It's right behind you. 535 00:29:08,715 --> 00:29:11,584 I'm talking rock-bottom FICO scores. 536 00:29:12,786 --> 00:29:14,320 No income verification. 537 00:29:15,455 --> 00:29:18,291 Adjustable rates. Dog shit! 538 00:29:19,793 --> 00:29:22,629 The default rates are already up from 1% to 4%, fellas. 539 00:29:22,729 --> 00:29:24,931 And if they rise to 8%, and they will, 540 00:29:25,732 --> 00:29:27,967 a lot of these BBB's are going to zero, too. 541 00:29:28,680 --> 00:29:29,469 And that... You're too close. 542 00:29:31,304 --> 00:29:33,273 - ...is an opportunity. - Okay. 543 00:29:33,340 --> 00:29:36,976 You're saying that at 8% the bonds fail and we are already at 4%? 544 00:29:37,770 --> 00:29:38,780 That's right. 545 00:29:38,144 --> 00:29:39,946 If they go to 8%, it's Armageddon? 546 00:29:40,130 --> 00:29:41,140 Yeah. That's right. 547 00:29:41,147 --> 00:29:42,849 How come nobody's talking about this? 548 00:29:42,982 --> 00:29:45,118 You're completely sure of the math? 549 00:29:45,185 --> 00:29:47,787 Look at him. That's my quant. 550 00:29:47,854 --> 00:29:48,922 Your what? 551 00:29:48,988 --> 00:29:50,790 My quantitative! 552 00:29:50,857 --> 00:29:53,526 My math specialist. Look at him. 553 00:29:53,660 --> 00:29:55,995 You notice anything different about him? Look at his face. 554 00:29:56,960 --> 00:29:57,130 That's pretty racist. 555 00:29:57,197 --> 00:29:59,699 Look at his eyes! I'll give you a hint. 556 00:29:59,799 --> 00:30:01,334 His name's Yang! 557 00:30:02,502 --> 00:30:05,805 He won a national math competition in China! 558 00:30:05,872 --> 00:30:08,375 He doesn't even speak English! 559 00:30:08,475 --> 00:30:10,143 Yeah, I'm sure of the math. 560 00:30:11,845 --> 00:30:15,648 Actually, my name's Jiang and I do speak English. 561 00:30:15,715 --> 00:30:17,183 Jared likes to say I don't because he thinks 562 00:30:17,283 --> 00:30:19,119 it makes me seem more authentic. 563 00:30:19,185 --> 00:30:21,721 And I got second in that national math competition. 564 00:30:22,322 --> 00:30:27,193 So you're offering us a chance to short this pile of blocks? How? 565 00:30:27,293 --> 00:30:29,896 With something called a credit default swap. 566 00:30:31,310 --> 00:30:33,533 It's like insurance on the bond, and if it goes bust 567 00:30:33,633 --> 00:30:36,803 you can make 10-to-1, even 20-to-1 return. 568 00:30:36,870 --> 00:30:39,500 And it's already slowly going bust! 569 00:30:39,239 --> 00:30:41,341 10-to-1? 20-to-1? No way. 570 00:30:41,408 --> 00:30:43,376 And no one's paying attention. 571 00:30:43,877 --> 00:30:46,312 No one is paying attention! 572 00:30:46,379 --> 00:30:49,849 Because the banks are too busy getting paid obscene fees 573 00:30:49,916 --> 00:30:51,217 to sell these bonds. 574 00:30:51,317 --> 00:30:54,540 But wait. You are the bank. You work for the bank. 575 00:30:54,154 --> 00:30:56,189 I bet your margins are pretty nice and fat. 576 00:30:56,256 --> 00:30:58,558 Let's not talk about my margins, by the way. 577 00:30:58,658 --> 00:31:01,194 Being nice and fat, that's a nice shirt. Do they make it for men? 578 00:31:02,620 --> 00:31:03,630 Aren't you the bank? 579 00:31:03,960 --> 00:31:06,320 I work for the bank. I don't think like a bank. 580 00:31:06,990 --> 00:31:10,300 Big bank, small bank, I like to make money. All right? 581 00:31:10,700 --> 00:31:12,772 Let me put it this way. I'm standing in front of a burning house... 582 00:31:12,906 --> 00:31:15,675 And I'm offering you fire insurance on it. 583 00:31:15,742 --> 00:31:18,244 How can these underlying bonds be as bad as you say? 584 00:31:18,378 --> 00:31:19,579 It wouldn't be legal. 585 00:31:19,679 --> 00:31:21,614 Nobody knows what's in them. 586 00:31:21,715 --> 00:31:23,216 Nobody knows what's in the bonds. 587 00:31:23,283 --> 00:31:26,386 I've seen some that are 65% AAA-rated 588 00:31:26,453 --> 00:31:29,422 that I know for a fact are filled with 95% 589 00:31:29,522 --> 00:31:32,292 subprime shit with FICOs below 550! 590 00:31:32,759 --> 00:31:33,893 Get the **** out of here. 591 00:31:33,960 --> 00:31:35,362 You want me to really blow your mind? 592 00:31:35,428 --> 00:31:36,963 When the market deems a bond too risky to buy, 593 00:31:37,630 --> 00:31:39,265 what do you think we do with it? 594 00:31:39,366 --> 00:31:41,968 - Take a guess. - I don't know. You tell me. 595 00:31:42,680 --> 00:31:45,972 All right. You think we just warehouse it on the books? No. 596 00:31:46,720 --> 00:31:47,974 We just repackage it with a bunch of other shit 597 00:31:48,740 --> 00:31:50,143 that didn't sell and put it into a CDO. 598 00:31:50,977 --> 00:31:52,979 - A CDO? - Yes. A CDO. 599 00:31:53,813 --> 00:31:55,582 - What is that? - This is where we take a bunch of B's, 600 00:31:55,648 --> 00:31:57,817 BB's and BBB's that haven't sold, 601 00:31:57,917 --> 00:31:59,586 and we put them in a pile. 602 00:32:01,121 --> 00:32:03,123 And when the pile gets large enough, 603 00:32:03,256 --> 00:32:05,792 the whole thing is suddenly considered diversified 604 00:32:05,892 --> 00:32:10,597 and the *****s at the rating agency give it a 92%-93% AAA rating, 605 00:32:10,663 --> 00:32:12,665 no questions asked. 606 00:32:14,334 --> 00:32:16,836 Hold it. What? Say that again. 607 00:32:17,137 --> 00:32:19,406 A collateralized debt obligation. 608 00:32:19,472 --> 00:32:20,974 It's important to understand because it's what allowed 609 00:32:21,740 --> 00:32:25,178 a housing crisis to become a nationwide economic disaster. 610 00:32:25,278 --> 00:32:28,481 Here's world-famous chef Anthony Bourdain to explain. 611 00:32:33,190 --> 00:32:36,589 Okay, I'm a chef on a Sunday afternoon setting the menu at a big restaurant. 612 00:32:36,690 --> 00:32:38,124 I ordered my fish on Friday, 613 00:32:38,191 --> 00:32:40,960 which is the mortgage bond that Michael Burry shorted. 614 00:32:41,161 --> 00:32:43,129 But some of the fresh fish doesn't sell. 615 00:32:43,196 --> 00:32:46,633 I don't know why. Maybe it just came out halibut has the intelligence of a dolphin. 616 00:32:46,700 --> 00:32:48,368 So, what am I going to do? 617 00:32:48,501 --> 00:32:52,500 Throw all this unsold fish, which is the BBB level of the bond, 618 00:32:52,105 --> 00:32:54,541 in the garbage and take the loss? 619 00:32:55,508 --> 00:32:56,509 No way. 620 00:32:56,543 --> 00:32:58,978 Being the crafty and morally onerous chef that I am, 621 00:32:59,450 --> 00:33:01,781 whatever crappy levels of the bond I don't sell, 622 00:33:01,881 --> 00:33:03,817 I throw into a seafood stew. 623 00:33:03,883 --> 00:33:07,354 See, it's not old fish. It's a whole new thing! 624 00:33:07,454 --> 00:33:11,157 And the best part is they're eating 3-day-old halibut. 625 00:33:11,224 --> 00:33:12,892 That is a CDO. 626 00:33:13,260 --> 00:33:15,862 I just need to know, how could these possibly be collated? 627 00:33:15,962 --> 00:33:18,331 Somehow you're like Dora the Explorer 628 00:33:18,398 --> 00:33:19,699 and you're the first person 629 00:33:19,799 --> 00:33:21,134 - who found this thing. - Hold on. Hold on. 630 00:33:21,201 --> 00:33:23,690 So mortgage bonds are dog shit, 631 00:33:23,169 --> 00:33:25,372 CDOs are dog shit wrapped in cat shit. 632 00:33:26,873 --> 00:33:28,708 Yeah, that's right. 633 00:33:28,808 --> 00:33:32,312 Institutions treat these CDOs like they're as solid as treasury bonds, 634 00:33:32,379 --> 00:33:34,748 and they're going to zero. 635 00:33:34,848 --> 00:33:37,500 No. That can't be right. There were $500 billion 636 00:33:37,150 --> 00:33:39,486 in housing bonds sold last year alone. 637 00:33:39,753 --> 00:33:42,389 The rating agencies, the banks, the ****ing government, 638 00:33:42,489 --> 00:33:44,491 you're saying they're all asleep at the wheel? 639 00:33:44,557 --> 00:33:48,280 Yeah. My whole department's long on this stuff. 640 00:33:48,895 --> 00:33:52,766 They call me Chicken Little. They call me Bubble Boy. 641 00:33:55,435 --> 00:33:58,872 A's, zero. B's, zero. 642 00:33:59,172 --> 00:34:02,409 BB's, zero. BBB's, zero. 643 00:34:04,844 --> 00:34:06,212 And then that happens. 644 00:34:06,279 --> 00:34:07,947 What is that? 645 00:34:09,849 --> 00:34:11,551 That's America's housing market. 646 00:34:14,521 --> 00:34:15,555 Thank you. 647 00:34:15,622 --> 00:34:16,623 ****in' A, Jared. 648 00:34:16,723 --> 00:34:18,725 Shut your ****ing mouth. 649 00:34:18,792 --> 00:34:20,960 - ...hang out with you. - Good. Okay. 650 00:34:21,940 --> 00:34:23,229 Sack up, do the deal. Let's be friends. 651 00:34:23,296 --> 00:34:24,531 We will see. Thank you. 652 00:34:24,597 --> 00:34:25,632 - Don't bullshit me. - All right. 653 00:34:25,732 --> 00:34:26,800 You're gonna say no, aren't you? 654 00:34:26,933 --> 00:34:29,402 No. No, I'm just evaluating right now. 655 00:34:29,469 --> 00:34:31,204 Thank you. Thank you for coming in. 656 00:34:32,272 --> 00:34:33,606 Bye, Jared. 657 00:34:39,646 --> 00:34:41,810 I don't like it. 658 00:34:42,480 --> 00:34:43,717 He's playing us. 659 00:34:44,818 --> 00:34:46,653 He's playing us. He's got too much skin in the game 660 00:34:46,753 --> 00:34:48,421 and he's dumping his position. 661 00:34:49,389 --> 00:34:50,890 What if he's right? 662 00:34:50,957 --> 00:34:53,993 - You want him to be right. - Yes, I do. 663 00:34:54,260 --> 00:34:57,330 The banks have given us 25% interest rates on credit cards. 664 00:34:57,430 --> 00:35:00,967 They have screwed us on student loans that we can never get out from under. 665 00:35:01,670 --> 00:35:04,270 Then this guy walks into my office and says 666 00:35:04,337 --> 00:35:07,307 those same banks got greedy, they lost track of the market, 667 00:35:07,407 --> 00:35:09,442 and I can profit off of their stupidity? 668 00:35:09,509 --> 00:35:11,778 ****, yeah, I want him to be right! 669 00:35:11,845 --> 00:35:13,113 How come you don't hate this guy? 670 00:35:13,179 --> 00:35:14,881 He's everything you taught us not to trust. 671 00:35:14,948 --> 00:35:16,649 I can't hate him. He is so transparent 672 00:35:16,750 --> 00:35:19,119 in his self-interest that I kind of respect him. 673 00:35:19,185 --> 00:35:21,488 Would I buy a car from him? No. 674 00:35:22,522 --> 00:35:23,790 Is he right about the mortgage market? 675 00:35:23,857 --> 00:35:26,920 - No. - Let's find out. Let's find out. 676 00:35:27,660 --> 00:35:29,496 Look. It's two very simple questions. 677 00:35:29,596 --> 00:35:31,970 Is there a housing bubble? 678 00:35:31,164 --> 00:35:33,767 And if there is, how exposed are the banks? 679 00:35:33,833 --> 00:35:34,868 Yeah. Okay. 680 00:35:34,968 --> 00:35:36,369 Let's get on this quickly too. 681 00:35:36,469 --> 00:35:37,837 Because if he's right, 682 00:35:37,937 --> 00:35:41,374 every loser with a couple million bucks and a fund is gonna be jumping on this. 683 00:35:41,941 --> 00:35:42,942 Let's go. 684 00:35:45,211 --> 00:35:46,713 Just that morning... 685 00:35:50,884 --> 00:35:54,220 JPMorgan Chase. JPMorgan Chase. 686 00:35:55,989 --> 00:35:58,358 Okay. Stop saying "JPMorgan Chase". 687 00:35:58,458 --> 00:35:59,859 I got a good feeling about this. 688 00:35:59,959 --> 00:36:01,428 It's just a meeting though, you know? 689 00:36:01,728 --> 00:36:03,663 It's just a meeting. It's something like... 690 00:36:03,730 --> 00:36:05,865 People have meetings all the time. You know? 691 00:36:05,965 --> 00:36:07,567 People drink their coffee, they have a meeting. 692 00:36:07,667 --> 00:36:09,200 - Brownfield Fund? - Yes! 693 00:36:09,690 --> 00:36:10,970 - Hey. Hello. - Ted. 694 00:36:11,370 --> 00:36:13,840 - Chris. I'm on Ted's desk. - Chris. Okay. 695 00:36:13,907 --> 00:36:15,750 - I'm Charlie, Charlie Geller. - Charlie. 696 00:36:15,175 --> 00:36:16,810 - Jamie Shipley. Hi. - Jamie. 697 00:36:16,876 --> 00:36:19,846 We're so excited to get set up on your trading platform. 698 00:36:19,913 --> 00:36:21,470 Cool. 699 00:36:21,147 --> 00:36:22,916 Here, have a seat a second. 700 00:36:23,683 --> 00:36:24,684 All right. 701 00:36:25,752 --> 00:36:28,688 So, I... Ted had asked me to do some meeting prep. 702 00:36:28,755 --> 00:36:32,158 But I couldn't find any marketing material on you guys. 703 00:36:32,225 --> 00:36:34,600 We just moved here from Boulder. 704 00:36:34,160 --> 00:36:35,662 - Yeah. - Got it. 705 00:36:35,729 --> 00:36:38,980 Could we see some of your offering documents? 706 00:36:38,198 --> 00:36:40,700 Well, Brownfield is its own money. 707 00:36:41,267 --> 00:36:43,300 - It's our money. - Yeah. 708 00:36:43,690 --> 00:36:44,871 Can you tell us how much you manage? 709 00:36:44,938 --> 00:36:48,408 Of course. We're doing $30 million right now. 710 00:36:48,508 --> 00:36:49,709 But we started 711 00:36:49,776 --> 00:36:52,545 - four years ago with $110,000. - Wow. 712 00:36:52,612 --> 00:36:57,250 So, as you can see, that's pretty phenomenal returns. 713 00:36:57,350 --> 00:37:00,553 We want to get an ISDA agreement with JPMorgan so we can 714 00:37:00,687 --> 00:37:03,189 deal in long-term options. 715 00:37:03,256 --> 00:37:04,591 - That's really cool. - Yeah. 716 00:37:17,470 --> 00:37:19,272 That is so cool. 717 00:37:19,372 --> 00:37:20,440 Thank you. 718 00:37:20,540 --> 00:37:24,711 But you guys are under the capital requirements for an ISDA. 719 00:37:24,811 --> 00:37:25,812 By how much? 720 00:37:27,714 --> 00:37:31,840 One billion four hundred seventy million, so... 721 00:37:32,850 --> 00:37:33,620 ...a lot. 722 00:37:34,888 --> 00:37:36,322 This makes us look bad, doesn't it, 723 00:37:36,423 --> 00:37:39,626 that we didn't know what the capital requirements were? 724 00:37:41,261 --> 00:37:42,662 It's not great. 725 00:37:43,163 --> 00:37:44,464 But 726 00:37:44,564 --> 00:37:47,000 keep up those returns and give us a call 727 00:37:47,100 --> 00:37:48,902 way down the line. You know. 728 00:37:48,968 --> 00:37:49,969 Okay? 729 00:37:50,700 --> 00:37:51,338 - Okay. - Thanks, Chris. 730 00:37:51,471 --> 00:37:53,473 - Have a good one, guys. - Thank you, Chris. 731 00:37:57,844 --> 00:37:58,845 Shit! 732 00:38:00,130 --> 00:38:01,314 Who the **** schedules a meeting 733 00:38:01,348 --> 00:38:03,483 - at 4:50 in the afternoon? - Oh, my, God. 734 00:38:03,583 --> 00:38:05,318 That was so painful. 735 00:38:05,418 --> 00:38:09,220 Dude, B of A and Bear didn't even return our calls. 736 00:38:09,122 --> 00:38:11,291 And even ****ing Wachovia 737 00:38:11,358 --> 00:38:13,260 - blew us off, man! - I know. 738 00:38:13,193 --> 00:38:15,462 Here's the prospectuses of all the other losers 739 00:38:15,528 --> 00:38:17,263 who didn't make it past the lobby. 740 00:38:17,330 --> 00:38:19,199 I don't think I can do this anymore. You know. 741 00:38:19,299 --> 00:38:22,135 I'm young, yet. I can still do something with my life. 742 00:38:22,202 --> 00:38:24,304 I miss Colorado anyway. The weed's better. 743 00:38:25,271 --> 00:38:27,273 Gentlemen, I need you to leave. 744 00:38:27,374 --> 00:38:28,775 Yep, yep, we're going. Let's go. 745 00:38:28,875 --> 00:38:30,100 Look at this. Look at this. 746 00:38:30,110 --> 00:38:31,444 This guy 747 00:38:31,511 --> 00:38:34,447 says that the housing market's a giant bubble. 748 00:38:36,816 --> 00:38:38,985 Okay, so this part isn't totally accurate, you know. 749 00:38:39,520 --> 00:38:41,154 We didn't find Jared Vennett's housing bubble pitch 750 00:38:41,221 --> 00:38:43,156 in the lobby of a bank that rejected us. 751 00:38:43,223 --> 00:38:44,691 The truth is 752 00:38:44,791 --> 00:38:47,660 a friend had told Charlie about it, and I read about it 753 00:38:47,727 --> 00:38:49,162 in Grant's Interest Rate Observer. 754 00:38:49,229 --> 00:38:50,563 This is crazy. 755 00:38:50,663 --> 00:38:53,166 This is crazy stuff. 756 00:38:53,233 --> 00:38:55,902 Shit, he's saying that there's 10-to-1 returns 757 00:38:56,200 --> 00:38:59,639 on credit default swaps for mortgage-backed securities? 758 00:38:59,739 --> 00:39:02,375 And the whole housing market is about to collapse? 759 00:39:03,760 --> 00:39:04,844 For Jamie and Charlie, the housing market 760 00:39:04,911 --> 00:39:07,380 doomsday prediction was music to their ears. 761 00:39:14,988 --> 00:39:16,923 They had started working out of Jamie's garage 762 00:39:17,230 --> 00:39:18,925 with $110,000 Jamie had saved 763 00:39:19,250 --> 00:39:21,940 taking sailboats up and down the East Coast. 764 00:39:23,290 --> 00:39:24,831 Our investment strategy was simple. 765 00:39:24,898 --> 00:39:26,933 People hate to think about bad things happening, 766 00:39:27,330 --> 00:39:29,369 so they always underestimate their likelihood. 767 00:39:29,436 --> 00:39:31,938 Their strategy was simple and brilliant. 768 00:39:32,505 --> 00:39:33,573 What he said. 769 00:39:33,673 --> 00:39:36,376 Jamie and Charlie found markets will sell options very cheaply 770 00:39:36,443 --> 00:39:38,678 on things they think will never happen. 771 00:39:38,745 --> 00:39:40,347 So when they were wrong, they were wrong small, 772 00:39:40,413 --> 00:39:42,382 but when they were right, they were right big. 773 00:39:49,222 --> 00:39:52,959 Within a few years they had turned $110,000 into $30 million. 774 00:39:53,590 --> 00:39:54,794 But then it was time to go to New York City. 775 00:39:54,794 --> 00:39:57,430 And so far, it wasn't going very well. 776 00:39:57,530 --> 00:39:59,265 So what if it does seem interesting. No... 777 00:39:59,366 --> 00:40:02,869 No bank will give us our ISDA. We're dead in the water. 778 00:40:04,371 --> 00:40:06,773 These kind of trades are totally out of the question. 779 00:40:06,873 --> 00:40:08,475 We got to call Ben. 780 00:40:10,710 --> 00:40:12,212 Let's call Ben! 781 00:40:13,790 --> 00:40:15,148 Ben Rickert was a former trader in Singapore 782 00:40:15,248 --> 00:40:17,984 for Chase who quit the whole game in disgust. 783 00:40:18,840 --> 00:40:20,420 He happened to be Jamie's neighbor when they were in Colorado 784 00:40:20,487 --> 00:40:22,655 and they met walking dogs. 785 00:40:22,756 --> 00:40:24,224 But Ben was dark. 786 00:40:24,324 --> 00:40:26,393 He didn't just think the whole system would fail. 787 00:40:26,459 --> 00:40:28,661 He thought the whole world was going down. 788 00:40:30,730 --> 00:40:32,832 Every one of these vegetables is fresh from my garden. 789 00:40:35,301 --> 00:40:36,603 You guys should start your own garden. 790 00:40:36,670 --> 00:40:40,140 What you got to do is get your soil off the petrochemicals. 791 00:40:40,240 --> 00:40:42,442 I used wood ash and urine to help restore the soil. 792 00:40:42,509 --> 00:40:44,110 It creates ammonium nitrate. 793 00:40:44,177 --> 00:40:45,945 Seeds are gonna be the new currency. 794 00:40:46,790 --> 00:40:48,810 And not those Franken-seeds from Monsanto. 795 00:40:48,148 --> 00:40:50,750 I'm talking about good, healthy, organic seeds. 796 00:40:50,817 --> 00:40:51,951 Make yourself a garden. 797 00:40:52,180 --> 00:40:53,486 - Learn to live off the land. - You're a ****ing lunatic. 798 00:40:53,586 --> 00:40:55,789 Ben had real experience in a big bank. 799 00:40:55,855 --> 00:40:59,526 Jamie and Charlie had never even been in a Manhattan bank bathroom. 800 00:40:59,659 --> 00:41:01,327 But Ben was done with the banking world. 801 00:41:01,428 --> 00:41:02,762 He was very clear. 802 00:41:02,829 --> 00:41:04,431 All right, let's crunch some numbers 803 00:41:04,497 --> 00:41:06,866 and then maybe we'll talk about calling Ben. 804 00:41:06,966 --> 00:41:08,100 We're always crunching numbers. 805 00:41:08,101 --> 00:41:09,135 When haven't we crunched the numbers? 806 00:41:09,202 --> 00:41:10,270 We're gonna crunch the numbers like harder... 807 00:41:10,370 --> 00:41:11,371 I need you out of here. 808 00:41:11,438 --> 00:41:13,440 - Of course. One second. - Yes, ma'am. We're going. 809 00:41:16,443 --> 00:41:18,712 Oh, God. I hate this. This is a total waste of time. 810 00:41:18,945 --> 00:41:21,281 Oh, come on. Would you relax? 811 00:41:22,150 --> 00:41:25,151 There's a housing development 45 minutes outside town. 812 00:41:25,218 --> 00:41:27,120 Mark wants us to check that out first. 813 00:41:27,187 --> 00:41:29,189 Well, I hope there are some Cuban restaurants on the way there. 814 00:41:29,289 --> 00:41:31,891 Because I heard the Cuban food is amazing in Miami. 815 00:41:31,991 --> 00:41:34,694 Please don't be chipper in the face of me being miserable. 816 00:41:34,794 --> 00:41:36,463 It really makes me hate you. 817 00:41:36,529 --> 00:41:39,650 How is wanting to eat good food being chipper? 818 00:41:40,800 --> 00:41:41,968 Hello? 819 00:41:43,370 --> 00:41:44,637 Hello? 820 00:41:45,405 --> 00:41:46,740 What do these go for? 821 00:41:48,408 --> 00:41:50,143 $425,000 each? 822 00:42:11,998 --> 00:42:13,566 What's up, man? What do you want? 823 00:42:13,666 --> 00:42:17,300 Hello. I'm surveying mortgage owners who are over 90 days delinquent. 824 00:42:17,700 --> 00:42:19,606 I'm looking for a Harvey Humpsey. 825 00:42:19,706 --> 00:42:20,874 You want my landlord's dog? 826 00:42:23,430 --> 00:42:24,511 Your landlord filled out his mortgage application 827 00:42:24,577 --> 00:42:27,470 using his dog's name? 828 00:42:27,113 --> 00:42:28,581 I guess so. 829 00:42:28,682 --> 00:42:31,184 Wait, has that ***hole not been paying his mortgage? 830 00:42:31,251 --> 00:42:32,585 'Cause I've been paying my rent. 831 00:42:32,686 --> 00:42:34,587 Well, yeah, he is over 90 days delinquent. 832 00:42:34,954 --> 00:42:36,556 Seriously, man, 833 00:42:36,623 --> 00:42:38,458 am I gonna have to leave? 834 00:42:40,960 --> 00:42:43,363 'Cause my kid just got settled in school, man. 835 00:42:43,430 --> 00:42:45,598 Hey. How are ya? 836 00:42:46,266 --> 00:42:48,768 - My name's Ken. - You're Ken? 837 00:42:48,868 --> 00:42:50,637 You should talk to your landlord about that. 838 00:42:50,737 --> 00:42:52,238 I'm sorry, I don't have any more information. 839 00:42:52,305 --> 00:42:53,707 But you... 840 00:42:54,374 --> 00:42:55,942 You have a great day. See ya, Ken. 841 00:42:56,420 --> 00:42:57,444 There's books everywhere! 842 00:42:57,544 --> 00:42:59,779 Books everywhere? 843 00:42:59,879 --> 00:43:03,116 Seriously, man, is everything gonna be okay? 844 00:43:03,216 --> 00:43:06,286 You should... You should call him. 845 00:43:06,386 --> 00:43:07,454 You should give him a call. 846 00:43:07,487 --> 00:43:09,222 It's not my fault, dude. I've been paying... 847 00:43:13,590 --> 00:43:14,127 Hello! 848 00:43:18,640 --> 00:43:20,166 Looks like the Mary Celeste. 849 00:43:20,266 --> 00:43:23,300 Look. All they took was the TV. 850 00:43:23,803 --> 00:43:25,772 It's weird. 851 00:43:25,839 --> 00:43:28,174 They didn't even clean out the cat litter. 852 00:43:36,750 --> 00:43:37,784 Oh, God. 853 00:43:49,429 --> 00:43:51,331 It's like Chernobyl. 854 00:43:51,431 --> 00:43:54,834 There's like a hundred houses. There can't be four people living here. 855 00:43:56,870 --> 00:43:59,390 - Oh, **** that! - Shit! 856 00:44:13,953 --> 00:44:16,990 He's been in there for seven hours. Where does he go to the bathroom? 857 00:44:17,570 --> 00:44:18,491 I heard he had a breakdown. 858 00:44:18,558 --> 00:44:20,527 He's letting the fund tank. 859 00:44:20,627 --> 00:44:22,620 My buddy in Manhattan said... 860 00:44:22,195 --> 00:44:23,730 Dr. Burry's office. 861 00:44:24,640 --> 00:44:25,765 No, he actually prefers that you email him. 862 00:44:25,799 --> 00:44:27,670 Excuse me. 863 00:44:27,400 --> 00:44:28,401 Mr. Fields, Mr... 864 00:44:32,539 --> 00:44:34,307 - Hi, Lawrence. - Holy shit! 865 00:44:35,909 --> 00:44:39,479 We have no confidence in your ability to identify 866 00:44:39,546 --> 00:44:42,549 macroeconomic trends. 867 00:44:43,483 --> 00:44:46,190 You flew here to tell me that? Why? 868 00:44:46,860 --> 00:44:49,522 Anyone can see that there is a real estate bubble. 869 00:44:49,589 --> 00:44:51,424 Actually, no one can see a bubble. 870 00:44:51,524 --> 00:44:52,726 That's what makes it a bubble. 871 00:44:52,826 --> 00:44:55,950 That's dumb, Lawrence. 872 00:44:55,195 --> 00:44:56,763 There's always markers. 873 00:44:57,530 --> 00:44:59,999 Mortgage fraud has 874 00:45:00,660 --> 00:45:01,835 quintupled since 2000 875 00:45:01,935 --> 00:45:04,771 and the average take-home pay is flat, 876 00:45:04,871 --> 00:45:06,339 but home prices are soaring. 877 00:45:06,406 --> 00:45:08,508 That means the homes are debt, not assets. 878 00:45:08,575 --> 00:45:10,777 So Mike Burry of San Jose, a guy who 879 00:45:11,778 --> 00:45:15,181 gets his hair cut at Supercuts and doesn't wear shoes, 880 00:45:15,281 --> 00:45:18,118 knows more than Alan Greenspan and Hank Paulson. 881 00:45:18,284 --> 00:45:19,285 Well... 882 00:45:20,200 --> 00:45:22,622 Dr. Mike Burry, yes, he does. 883 00:45:23,857 --> 00:45:25,625 That's cute. That's cute. 884 00:45:25,725 --> 00:45:28,610 Are you being sarcastic with us, Mike? 885 00:45:31,197 --> 00:45:32,599 Lawrence, 886 00:45:32,699 --> 00:45:35,201 I don't know how to be sarcastic. 887 00:45:35,869 --> 00:45:38,638 I don't know how to be funny. I don't know how to 888 00:45:39,305 --> 00:45:40,774 work people. 889 00:45:40,874 --> 00:45:42,420 I... 890 00:45:42,108 --> 00:45:44,444 I just know how to read numbers. 891 00:45:44,544 --> 00:45:47,470 How big is your short position right now? 892 00:45:48,548 --> 00:45:50,116 Just $1.3 billion. 893 00:45:50,717 --> 00:45:53,553 - And the premiums? - Well, we pay 894 00:45:53,987 --> 00:45:57,323 roughly $80 to 90 million 895 00:45:57,457 --> 00:45:58,925 each year, which is high, 896 00:45:58,992 --> 00:46:01,940 but I was the first to do this trade. 897 00:46:01,161 --> 00:46:04,631 Watch. It will pay. I may have been early, but I'm not wrong. 898 00:46:04,731 --> 00:46:07,670 It's the same thing. It's the same thing, Mike! 899 00:46:07,901 --> 00:46:12,500 You're managing a fund of, what, $555 million? 900 00:46:12,572 --> 00:46:16,760 In six years, it'll all be gone. 901 00:46:16,843 --> 00:46:18,278 On one bet. 902 00:46:18,345 --> 00:46:21,514 No, the second quarter of '07 is when the adjustable rates kick in. 903 00:46:21,648 --> 00:46:23,149 The defaults will skyrocket. 904 00:46:23,249 --> 00:46:24,951 Yeah. Says you. 905 00:46:25,180 --> 00:46:27,487 How much is eligible for withdrawal before they do? 906 00:46:27,587 --> 00:46:29,489 Say, in the next two quarters. 907 00:46:30,190 --> 00:46:32,192 If your investors panic. 908 00:46:35,762 --> 00:46:37,864 - $302 million? - I... 909 00:46:38,765 --> 00:46:40,367 My God, Mike. 910 00:46:45,205 --> 00:46:47,140 No one will pull out. That would be suicide. 911 00:46:47,207 --> 00:46:49,642 I mean, I'm down 17% for the year. 912 00:46:49,776 --> 00:46:52,450 But if they trust me, and they trust me, because... 913 00:46:52,145 --> 00:46:54,781 No one trusts you! No one! 914 00:46:54,848 --> 00:46:57,283 I sent several emails to my investors 915 00:46:57,384 --> 00:46:59,452 letting them know that the... 916 00:47:01,540 --> 00:47:06,590 ...the second quarter of '07 is when our housing positions show returns and... 917 00:47:07,460 --> 00:47:08,695 I've been very clear. 918 00:47:09,496 --> 00:47:12,332 People will withdraw their money. 919 00:47:12,899 --> 00:47:16,369 Lawrence, that would be so stupid. I mean, the... 920 00:47:16,469 --> 00:47:19,973 If the fund's capitals drop too much, 921 00:47:20,407 --> 00:47:23,510 then the swaps contracts are voided. 922 00:47:23,576 --> 00:47:26,846 And then the banks get to keep all of the collateral. 923 00:47:26,913 --> 00:47:29,149 - Wait a minute. Wait. - All of it. 924 00:47:29,249 --> 00:47:31,384 The contracts are voided? 925 00:47:31,484 --> 00:47:33,253 The contracts are voided? 926 00:47:33,987 --> 00:47:35,655 Holy shit! 927 00:47:36,890 --> 00:47:37,900 Oh, mother****er! 928 00:47:37,757 --> 00:47:39,259 Michael? 929 00:47:39,659 --> 00:47:41,327 Give me my money back. 930 00:47:44,731 --> 00:47:48,101 Michael, do you hear me? I want my money back. 931 00:47:50,603 --> 00:47:52,939 Give me my ****ing money back... 932 00:47:54,700 --> 00:47:55,408 ...you mother****er. 933 00:47:56,343 --> 00:47:59,446 The market's in an itsy-bitsy little gully right now. 934 00:47:59,579 --> 00:48:01,848 It's like everybody said, "Okay, that was crazy. 935 00:48:01,915 --> 00:48:03,783 "Let's just all calm down." 936 00:48:05,618 --> 00:48:08,855 I sold that house for $350,000 the year it was built. 937 00:48:09,522 --> 00:48:11,691 Two years later, $480,000. 938 00:48:11,791 --> 00:48:14,961 Then $585,000 maybe 18 months ago. 939 00:48:15,950 --> 00:48:17,630 This couple bought it for $650,000 last year. 940 00:48:18,131 --> 00:48:19,966 He'd let it go for that. 941 00:48:20,660 --> 00:48:21,735 Hi, John. 942 00:48:21,801 --> 00:48:22,869 No, no, no. 943 00:48:23,470 --> 00:48:24,871 It will break his heart, but he'll let it go. 944 00:48:24,971 --> 00:48:26,740 Why is he selling? 945 00:48:26,806 --> 00:48:28,641 Neither one's working right now. 946 00:48:29,642 --> 00:48:32,278 Marlene, you'd say they're motivated, right? 947 00:48:32,379 --> 00:48:35,382 As motivated as one can be in this neighborhood. 948 00:48:35,448 --> 00:48:37,984 This house on the left, I would say they're probably motivated. 949 00:48:38,840 --> 00:48:40,530 Wow, a lot of people seem very motivated. 950 00:48:40,120 --> 00:48:41,221 Oh, it's just the gully. 951 00:48:41,488 --> 00:48:43,256 That's all. Just... 952 00:48:43,323 --> 00:48:44,758 Just nerves. 953 00:48:44,824 --> 00:48:46,559 So where do we stand? 954 00:48:47,727 --> 00:48:50,230 I need to talk to my wife. 955 00:48:50,296 --> 00:48:51,598 This market won't last. 956 00:48:51,664 --> 00:48:53,466 Actually, could I talk to a mortgage broker? 957 00:48:53,566 --> 00:48:55,402 Anybody you recommend? Anybody you like. 958 00:48:55,468 --> 00:48:57,470 Yes, yes, I have someone. Absolutely. 959 00:48:57,570 --> 00:48:58,805 Yeah, ***** better like me. 960 00:48:58,905 --> 00:49:00,140 Sent her *** to Cabo. 961 00:49:01,775 --> 00:49:04,344 So is Morgan Stanley recruiting us? Is that it? 962 00:49:04,644 --> 00:49:07,614 Oh, no. No. The bank owns our hedge fund, 963 00:49:07,681 --> 00:49:08,748 but we're not really part of it. 964 00:49:08,848 --> 00:49:11,317 We invest in financial service companies 965 00:49:11,418 --> 00:49:14,354 and we're trying to understand the residential mortgage business. 966 00:49:14,454 --> 00:49:17,357 How many loans do you write each month? 967 00:49:17,490 --> 00:49:19,250 - About 60. - Yeah. 968 00:49:19,125 --> 00:49:20,593 What was it four years ago? 969 00:49:21,528 --> 00:49:22,862 Ten... 970 00:49:22,962 --> 00:49:24,197 Maybe 15. 971 00:49:24,297 --> 00:49:26,599 Yeah, I was a bartender. Now I own a boat. 972 00:49:26,666 --> 00:49:27,667 You own a... 973 00:49:27,701 --> 00:49:30,970 So how many of these are adjustable-rate mortgages? 974 00:49:31,370 --> 00:49:32,706 - Well, most. - Oh, yeah. 975 00:49:32,806 --> 00:49:34,774 Yeah, I'd say about 90%. 976 00:49:34,841 --> 00:49:37,977 The bonuses on those skyrocketed a few years ago. 977 00:49:38,440 --> 00:49:39,379 Adjustable's our bread and honey. 978 00:49:39,446 --> 00:49:41,981 So do applicants ever get rejected? 979 00:49:46,319 --> 00:49:47,520 Seriously? 980 00:49:48,388 --> 00:49:50,490 Look, if they get rejected, I suck at my job. 981 00:49:50,557 --> 00:49:52,580 Even if they have no money? 982 00:49:52,158 --> 00:49:55,280 Well, my firm offers NINJA loans. 983 00:49:55,128 --> 00:49:57,564 - Okay. - "No Income, No Job." 984 00:49:57,897 --> 00:50:00,133 I just leave the income section blank if I want. 985 00:50:00,200 --> 00:50:01,468 Corporate doesn't care. 986 00:50:01,534 --> 00:50:04,838 These people just want homes. And they go with the flow. 987 00:50:04,904 --> 00:50:06,973 - Good for you. - Your companies don't verify? 988 00:50:10,744 --> 00:50:12,746 If I write a loan on Friday afternoon, 989 00:50:13,646 --> 00:50:15,648 a big bank will buy it by Monday lunch. 990 00:50:16,182 --> 00:50:17,517 Yeah. Same here. 991 00:50:19,319 --> 00:50:22,188 - Could you hold on a second? - Yeah. 992 00:50:27,861 --> 00:50:30,530 I don't get it. Why are they confessing? 993 00:50:30,597 --> 00:50:32,565 They're not confessing. 994 00:50:32,699 --> 00:50:34,367 They're bragging. 995 00:50:43,109 --> 00:50:47,113 Do people have any idea what they are buying? 996 00:50:48,810 --> 00:50:50,350 I focus on the immigrants, you know. 997 00:50:50,417 --> 00:50:51,851 Once they find out they're getting a home, 998 00:50:51,918 --> 00:50:53,520 they sign where you tell them to sign. 999 00:50:53,586 --> 00:50:55,722 Don't ask questions. Don't understand the rates. 1000 00:50:55,789 --> 00:50:57,257 - ****ing idiots. - Yeah. 1001 00:50:57,357 --> 00:50:58,758 And you target immigrants, too? 1002 00:50:58,858 --> 00:51:01,695 Well, their credit actually isn't bad enough for him. 1003 00:51:03,596 --> 00:51:05,265 Look, I'm a yield guy. 1004 00:51:05,765 --> 00:51:06,800 Okay... 1005 00:51:07,901 --> 00:51:11,304 I make $2,000 on a fixed-rate prime loan, right? 1006 00:51:11,404 --> 00:51:15,410 But I can make $10,000 on a subprime adjustable. 1007 00:51:15,108 --> 00:51:18,780 Trust me, I'm not driving a 7 Series without strippers. 1008 00:51:18,144 --> 00:51:21,448 No one on the pole has good credit and they're all cash rich. 1009 00:51:21,548 --> 00:51:23,883 I think I read Warren Buffett say something like that. 1010 00:51:24,384 --> 00:51:26,619 What? Who's Warren Buffett? 1011 00:51:27,153 --> 00:51:29,889 Okay, so strippers. Like exotic dancers? 1012 00:51:34,940 --> 00:51:35,295 Can you introduce us? 1013 00:51:37,797 --> 00:51:39,299 Hey, there's a bubble. 1014 00:51:39,399 --> 00:51:40,400 How do you know? 1015 00:51:40,467 --> 00:51:43,903 Trust me. Call Vennett, buy $50 million in swaps on the MBS. 1016 00:51:43,970 --> 00:51:46,906 What do we got? Garibaldi IV, BBB. 1017 00:51:46,973 --> 00:51:48,475 Mark, are you sure? 1018 00:51:48,575 --> 00:51:50,410 Yeah. Yeah, it's time to call bullshit. 1019 00:51:50,477 --> 00:51:53,146 - Bullshit on what? - Every ****ing thing. 1020 00:52:17,337 --> 00:52:19,500 FrontPoint! FrontPoint! 1021 00:52:20,840 --> 00:52:22,642 Is this America's angriest hedge fund? 1022 00:52:22,742 --> 00:52:24,844 All right, listen. I got one last question for you. 1023 00:52:26,120 --> 00:52:27,847 How are you ****ing us? 1024 00:52:29,683 --> 00:52:31,284 There's a nicer way to say that, Vinnie. 1025 00:52:31,317 --> 00:52:32,852 I'm serious. 1026 00:52:32,952 --> 00:52:36,220 We'll buy your swaps, but only if you say how you're ****ing us. 1027 00:52:36,122 --> 00:52:38,625 I'm not ****ing you, Vinnie. I'm kissing you. 1028 00:52:38,692 --> 00:52:41,461 I'm looking deep into your eyes as I make love to you, Vinnie. 1029 00:52:41,528 --> 00:52:44,864 I'm handing you the deal of the century on a ****ing platter. 1030 00:52:44,964 --> 00:52:47,333 What do I get out of it? Easy. 1031 00:52:47,434 --> 00:52:49,836 I got a $20-million-a-month negative carry. 1032 00:52:49,936 --> 00:52:51,304 I got bosses trying to pull the plug 1033 00:52:51,371 --> 00:52:53,807 because they think I'm out of my ****ing mind. 1034 00:52:53,873 --> 00:52:54,874 All right? 1035 00:52:54,974 --> 00:52:56,420 We make this trade, 1036 00:52:56,142 --> 00:52:58,478 those problems aren't so big anymore. 1037 00:52:58,545 --> 00:53:02,315 And sure, swaps are a dark market, so I set the price. 1038 00:53:02,382 --> 00:53:03,883 Whatever price I want. 1039 00:53:03,983 --> 00:53:05,385 And when you come for the payday, 1040 00:53:05,518 --> 00:53:07,721 I'm gonna rip your eyes out, I'm gonna make a fortune. 1041 00:53:08,855 --> 00:53:10,357 But the good news is, Vinnie, you're not gonna care 1042 00:53:10,457 --> 00:53:12,659 because you're gonna make so much ****ing money. 1043 00:53:12,726 --> 00:53:14,270 That's what I get out of it. 1044 00:53:14,127 --> 00:53:15,395 Want to know what you get out of it? 1045 00:53:15,495 --> 00:53:18,998 You get the ice cream, the hot fudge, the banana, and the nuts. 1046 00:53:19,650 --> 00:53:20,834 Right now, I get the sprinkles, and, yeah, 1047 00:53:20,900 --> 00:53:23,536 if this goes through, I get the cherry. 1048 00:53:23,636 --> 00:53:25,839 But you get the sundae, Vinnie. 1049 00:53:25,905 --> 00:53:27,574 You get the sundae. 1050 00:53:30,430 --> 00:53:32,846 All right, I buy that. Thank you. 1051 00:53:32,912 --> 00:53:35,810 So what do you say? 1052 00:53:35,181 --> 00:53:37,500 - You want me to make you a market? - Yeah. 1053 00:53:37,150 --> 00:53:40,653 We'll take $50 million, Garibaldi IV, BBB. 1054 00:53:42,880 --> 00:53:44,157 Sharpen your pencils. I'll get the paperwork ready. 1055 00:53:46,860 --> 00:53:48,361 **** you, too. 1056 00:53:50,330 --> 00:53:51,831 Yes! 1057 00:53:53,767 --> 00:53:54,768 That's right. 1058 00:53:56,903 --> 00:53:58,838 Oh, man. 1059 00:53:58,905 --> 00:54:02,442 He has so many numbers, and I always forget 1060 00:54:03,243 --> 00:54:04,878 which one he prefers, because he's very specific. 1061 00:54:04,944 --> 00:54:06,179 Start with the first one. 1062 00:54:06,246 --> 00:54:07,447 I don't know if it's the first one. 1063 00:54:07,580 --> 00:54:08,882 Just try it. 1064 00:54:08,948 --> 00:54:10,517 Okay. I... Okay. 1065 00:54:28,134 --> 00:54:30,904 - Ben Rickert. - Hey, Ben. It's Jamie. 1066 00:54:32,439 --> 00:54:34,541 Jamie, you know you're not supposed to use this line. 1067 00:54:36,776 --> 00:54:38,440 Told you. 1068 00:54:39,412 --> 00:54:42,820 Okay, let's try number two out of 14. 1069 00:54:53,660 --> 00:54:54,661 Ben Rickert. 1070 00:54:54,761 --> 00:54:56,763 Ben, why do you do that, man? I mean... 1071 00:54:56,830 --> 00:54:59,265 You're a retired trader, okay? No one is listening to your calls. 1072 00:54:59,332 --> 00:55:01,670 The NSA has a $52 billion budget and the ability 1073 00:55:01,134 --> 00:55:02,502 to monitor tens of millions of calls a second. 1074 00:55:02,602 --> 00:55:04,938 You think they're not using it? 1075 00:55:05,500 --> 00:55:07,841 Hey, I promise I will refrain from saying 1076 00:55:07,941 --> 00:55:10,110 "Ben Rickert" and "dirty bomb" in the same sent... 1077 00:55:11,978 --> 00:55:13,613 - Jesus ****ing Christ. - I'm sorry, dude. 1078 00:55:15,281 --> 00:55:16,349 Ben Rickert. 1079 00:55:16,483 --> 00:55:18,852 Did you get a chance to look at what we sent you, Ben? 1080 00:55:18,952 --> 00:55:21,121 It's Charlie. I'm here, too. 1081 00:55:21,855 --> 00:55:24,190 Hi, Charlie. Yeah, I did. Hold on. 1082 00:55:30,196 --> 00:55:32,532 - Ben, you still there? - Yeah. 1083 00:55:33,299 --> 00:55:35,335 I'll be honest, gentlemen. 1084 00:55:35,435 --> 00:55:37,337 It scared the shit out of me. 1085 00:55:37,470 --> 00:55:38,838 But that's a good thing, right? 1086 00:55:38,938 --> 00:55:41,708 That means this Vennett guy's not wrong. 1087 00:55:42,442 --> 00:55:43,510 No, he's not. 1088 00:55:46,212 --> 00:55:47,213 Cool. 1089 00:55:47,313 --> 00:55:48,882 Tell me more about these CDOs. 1090 00:55:48,982 --> 00:55:52,719 Yeah, yeah. Okay, so, you know, Vennett mentions the CDOs, 1091 00:55:52,852 --> 00:55:54,387 but actually, we took a look 1092 00:55:54,487 --> 00:55:56,189 and they're way worse than even he realizes. 1093 00:55:56,222 --> 00:55:57,657 These things don't make any sense! 1094 00:55:57,724 --> 00:55:58,992 We can't even model them. 1095 00:55:59,590 --> 00:56:01,795 These are 100 times bigger than the MBS. 1096 00:56:01,861 --> 00:56:03,463 And 90% AAA-rated. 1097 00:56:03,530 --> 00:56:05,298 - Yes! Exactly! - Over 90%. 1098 00:56:05,398 --> 00:56:06,499 It's incredible. 1099 00:56:06,566 --> 00:56:09,736 I took a good hard look at the CDOs you want to short. 1100 00:56:10,503 --> 00:56:12,906 They're brilliant. Worthless. Total crap. 1101 00:56:13,573 --> 00:56:15,742 Jamie. Very good. 1102 00:56:15,842 --> 00:56:19,346 What can I say? I'm good at finding shit. 1103 00:56:19,412 --> 00:56:22,182 So, Ben, we shorted the BB's and the BBB's, 1104 00:56:22,248 --> 00:56:24,351 and the risk is relatively low. 1105 00:56:24,417 --> 00:56:27,870 - Payoff is, like, 25-to-1. - Yeah. 1106 00:56:29,422 --> 00:56:31,524 Okay, so, why are you calling me? I don't do this anymore. 1107 00:56:31,591 --> 00:56:32,759 Look, Ben? 1108 00:56:34,940 --> 00:56:37,864 We need you to help us get the ISDA. 1109 00:56:37,931 --> 00:56:41,340 If we get a hunting license, we can short this crap. 1110 00:56:41,101 --> 00:56:43,570 And we know you hate Wall Street. We're not asking you to do the trading. 1111 00:56:43,670 --> 00:56:47,607 We're simply asking you to help us get a seat 1112 00:56:47,707 --> 00:56:50,877 at the ****ing table. 1113 00:56:50,944 --> 00:56:52,879 It's a pretty ugly table, guys. 1114 00:56:52,946 --> 00:56:57,951 Look, Ben, the system ****ed up in a big, big way here, okay? 1115 00:56:58,510 --> 00:57:00,120 And somehow 1116 00:57:00,453 --> 00:57:03,123 we know before anyone else. 1117 00:57:03,456 --> 00:57:06,393 You know? This is a once-in-a-lifetime deal. 1118 00:57:08,962 --> 00:57:09,963 I'm thinking. 1119 00:57:15,680 --> 00:57:16,970 Okay. I'll call Deutsche Bank. 1120 00:57:17,700 --> 00:57:19,305 Thank you, Ben. Thank you. 1121 00:57:19,406 --> 00:57:22,976 And Bear. What about Bear? They have some reprehensible product. 1122 00:57:23,309 --> 00:57:25,645 Okay. Bear will trade with anybody. 1123 00:58:13,793 --> 00:58:16,529 All right. I'll see if I can push it through. 1124 00:58:16,629 --> 00:58:18,465 Thank you, Noah. And thank Jared for us. 1125 00:58:20,433 --> 00:58:22,969 - Couldn't we go inside? - Yeah, me, too. 1126 00:59:07,800 --> 00:59:09,416 Hi. It's Mark. I need to talk to Vinnie right now. 1127 00:59:09,516 --> 00:59:12,919 We're just asking you to explain to us 1128 00:59:13,860 --> 00:59:15,555 just how it is that you are ****ing us, 1129 00:59:15,655 --> 00:59:16,890 because what we are seeing... 1130 00:59:19,759 --> 00:59:21,940 Morgan Stanley building, fast. 1131 00:59:22,620 --> 00:59:24,531 Are we hooked up to the same computer screen? 1132 00:59:24,597 --> 00:59:26,266 It doesn't make any sense. 1133 00:59:29,102 --> 00:59:30,570 Vinnie, you there? 1134 00:59:31,710 --> 00:59:33,390 - Mark, you there? - Yeah, did you hear? 1135 00:59:33,106 --> 00:59:34,874 Mortgage defaults have gone through the roof. 1136 00:59:34,941 --> 00:59:36,409 Is anybody jumping off of buildings yet? 1137 00:59:36,509 --> 00:59:38,712 Why would they? Subprime mortgage bond prices are up. 1138 00:59:38,778 --> 00:59:39,846 What? 1139 00:59:39,913 --> 00:59:43,216 Vennett wants $1.9 million more in collateral by close. 1140 00:59:43,283 --> 00:59:44,584 Vennett's asking us to post collateral. 1141 00:59:44,684 --> 00:59:46,860 What the hell is going on? 1142 00:59:46,186 --> 00:59:48,121 We don't know, but Deutsche's on the phone demanding payment. 1143 00:59:48,221 --> 00:59:50,560 Call Vennett. Call that little shit. 1144 00:59:50,123 --> 00:59:52,920 Call Vennett. Tell him to get his *** down here. 1145 00:59:52,192 --> 00:59:53,960 So subprime loans go bad, 1146 00:59:54,600 --> 00:59:57,263 but subprime bonds, which are made up of subprime loans, are more valuable? 1147 00:59:57,364 --> 00:59:59,799 I know. They want another $1.9 million by market close. 1148 00:59:59,933 --> 01:00:02,680 What about the ratings agencies? Moody's, S&P... 1149 01:00:02,135 --> 01:00:04,571 Are they downgrading the CDOs and mortgage bonds? 1150 01:00:04,637 --> 01:00:05,739 Where are the ratings agencies at? 1151 01:00:05,805 --> 01:00:08,908 - They're the ****ing same. - No, they're all still AAA. 1152 01:00:08,975 --> 01:00:11,478 What the hell? Are you ****ing kidding me? 1153 01:00:11,578 --> 01:00:13,646 Those ****ers! Those mother****ers! 1154 01:00:13,747 --> 01:00:16,750 They go public, and all they care about is their bottom line and their shit. 1155 01:00:16,783 --> 01:00:18,551 Hey, Mark, that's not all. 1156 01:00:18,618 --> 01:00:19,919 The Morgan Stanley risk guys are here. 1157 01:00:19,986 --> 01:00:21,388 They called in Kathy Tao. 1158 01:00:21,454 --> 01:00:23,590 They're trying to convince her to make us sell our swaps. 1159 01:00:23,656 --> 01:00:25,925 Apparently, tying up six years of insurance payments 1160 01:00:25,992 --> 01:00:27,761 in hopes of a housing Armageddon 1161 01:00:27,827 --> 01:00:30,463 - is not prudent investing. - What did Kathy say? 1162 01:00:30,563 --> 01:00:33,266 Nothing yet. She keeps asking if this is one of your crusades. 1163 01:00:33,333 --> 01:00:35,268 Okay, I want you to walk back in there 1164 01:00:35,335 --> 01:00:39,806 and very calmly, very politely, tell the risk assessors to **** off. 1165 01:00:39,906 --> 01:00:41,574 And then meet me over at Standard & Poor's. 1166 01:00:41,641 --> 01:00:43,143 We're gonna talk to Georgia. 1167 01:00:43,243 --> 01:00:44,277 All right. Okay. 1168 01:00:44,344 --> 01:00:46,279 Get that **** Jared Vennett in this office. 1169 01:00:46,346 --> 01:00:48,148 I'm gonna bash his ****ing head in. 1170 01:00:53,420 --> 01:00:54,754 Gentlemen? 1171 01:00:54,821 --> 01:00:57,857 I spoke with Mark Baum. He says to **** off. 1172 01:01:11,671 --> 01:01:14,700 I can't see a damn thing. 1173 01:01:15,675 --> 01:01:17,877 My eye doctor's always busy. 1174 01:01:17,977 --> 01:01:19,779 I end up taking any appointment they'll give me, 1175 01:01:19,846 --> 01:01:22,182 and then the whole morning gets shot to hell! 1176 01:01:23,350 --> 01:01:24,851 So... 1177 01:01:25,352 --> 01:01:26,853 All righty, 1178 01:01:27,220 --> 01:01:29,723 FrontPoint Partners, 1179 01:01:30,290 --> 01:01:32,659 how can Standard & Poor's help you? 1180 01:01:32,726 --> 01:01:33,993 Well, we don't understand why 1181 01:01:34,600 --> 01:01:36,696 the ratings agencies haven't downgraded subprime bonds 1182 01:01:36,796 --> 01:01:39,833 since the underlying loans are clearly deteriorating. 1183 01:01:39,899 --> 01:01:42,335 Well, the delinquency rates do have people worried, 1184 01:01:42,402 --> 01:01:44,204 but they're actually within our models. 1185 01:01:44,304 --> 01:01:46,239 - So... - Says you. 1186 01:01:47,407 --> 01:01:49,843 ...you're convinced the underlying mortgages 1187 01:01:49,909 --> 01:01:52,345 in these bonds are solid loans. 1188 01:01:52,479 --> 01:01:54,347 That is our opinion, yes. 1189 01:01:54,414 --> 01:01:56,516 Have you looked at the loan-level data? 1190 01:01:56,583 --> 01:01:58,351 I mean, they're giving these loans 1191 01:01:58,418 --> 01:01:59,686 to anybody with a credit score and a pulse. 1192 01:01:59,753 --> 01:02:02,355 Excuse me, sir. What do you think we do here all day? 1193 01:02:02,422 --> 01:02:03,490 We're not sure. That's why we're here. 1194 01:02:03,556 --> 01:02:04,691 Here's what I don't understand... 1195 01:02:04,758 --> 01:02:06,493 We check, recheck, recheck again. 1196 01:02:06,593 --> 01:02:07,894 If these mortgage bonds are so stable... 1197 01:02:07,994 --> 01:02:09,696 Perhaps you could check your friend. 1198 01:02:09,763 --> 01:02:11,765 ...have you ever refused to rate... 1199 01:02:11,865 --> 01:02:13,199 Ma'am, that's delusional. 1200 01:02:13,266 --> 01:02:14,401 We stand behind them. 1201 01:02:14,501 --> 01:02:16,690 Georgia, have you ever refused to rate 1202 01:02:16,169 --> 01:02:19,439 any of these bonds upper tranches AAA? 1203 01:02:19,539 --> 01:02:21,107 Can we see the paperwork on those deals? 1204 01:02:21,207 --> 01:02:23,209 I am under no obligation to share that information 1205 01:02:23,276 --> 01:02:24,377 with you, whoever you might be. 1206 01:02:24,444 --> 01:02:26,179 Just answer the question, Georgia. 1207 01:02:26,279 --> 01:02:28,248 Can you name one time in the past year 1208 01:02:28,348 --> 01:02:29,683 where you checked the tape 1209 01:02:29,749 --> 01:02:33,953 and you didn't give the banks the AAA percentage they wanted? 1210 01:02:36,222 --> 01:02:37,390 If we don't give them the ratings, 1211 01:02:37,457 --> 01:02:39,392 they'll go to Moody's, right down the block. 1212 01:02:40,293 --> 01:02:43,630 If we don't work with them, they will go to our competitors. 1213 01:02:44,297 --> 01:02:47,467 Not our fault. Simply the way the world works. 1214 01:02:51,805 --> 01:02:54,307 - Holy shit. - Yes, now you see. 1215 01:02:55,375 --> 01:02:57,410 And I never said that. 1216 01:02:57,477 --> 01:02:59,913 They're selling ratings for fees. 1217 01:02:59,979 --> 01:03:00,980 A ratings shop. 1218 01:03:01,470 --> 01:03:03,883 You can afford to make less. Make less. 1219 01:03:03,950 --> 01:03:05,819 Nobody said that. 1220 01:03:05,919 --> 01:03:08,880 And it is not my decision. I have a boss. 1221 01:03:08,154 --> 01:03:10,957 - Are you kidding me? - No, I am not "kidding you". 1222 01:03:11,570 --> 01:03:13,326 How'd your boss do on the IPO? 1223 01:03:13,426 --> 01:03:14,627 Is that the angle you're taking? 1224 01:03:14,728 --> 01:03:18,264 So, now, anyone who has a boss can't be held responsible 1225 01:03:18,331 --> 01:03:19,799 for doing shitty and illegal things. 1226 01:03:19,833 --> 01:03:21,434 What are you, four? 1227 01:03:21,501 --> 01:03:25,805 No, I am not four, Mr. Baum. I am not, no. 1228 01:03:25,905 --> 01:03:29,275 And I wonder what your incentives might be. 1229 01:03:29,409 --> 01:03:30,944 Is it maybe in your best interest 1230 01:03:31,110 --> 01:03:34,140 to have the ratings change? Is it, perhaps? 1231 01:03:35,815 --> 01:03:37,751 How many credit default swaps do you own? 1232 01:03:40,420 --> 01:03:42,288 It doesn't make me wrong. 1233 01:03:42,355 --> 01:03:43,490 No. 1234 01:03:43,590 --> 01:03:45,692 It just makes you a hypocrite. 1235 01:04:26,332 --> 01:04:28,334 ****! 1236 01:04:28,401 --> 01:04:29,536 Mortgage delinquencies went up 1237 01:04:29,636 --> 01:04:31,671 and the CDOs got more valuable. Unbelievable. 1238 01:04:31,738 --> 01:04:34,700 - Unbelievable. - We know. It's completely backwards. 1239 01:04:34,740 --> 01:04:35,675 I just called an old friend at Bear. 1240 01:04:35,742 --> 01:04:37,410 He didn't even know what a CDO is. 1241 01:04:37,510 --> 01:04:41,848 Yeah, I just had to wire Bear and Deutsche $70,000. 1242 01:04:41,915 --> 01:04:44,250 It's like two plus two equals 1243 01:04:44,751 --> 01:04:45,919 fish. 1244 01:04:46,190 --> 01:04:48,688 It's rigged. We bought into a rigged game. 1245 01:04:48,755 --> 01:04:50,557 We're gonna lose everything. 1246 01:04:50,657 --> 01:04:53,930 I'm gonna have to move back in with my mom. 1247 01:04:53,660 --> 01:04:55,280 Can't do that. 1248 01:04:55,950 --> 01:04:57,263 All right. Well, I got a colonic appointment. 1249 01:04:57,364 --> 01:04:59,320 Wait a minute. Hold on, Ben. 1250 01:04:59,990 --> 01:05:00,433 Ben, look. 1251 01:05:00,533 --> 01:05:02,902 Either the banks are clueless 1252 01:05:03,200 --> 01:05:05,271 and they don't know how to value these CDOs, 1253 01:05:05,372 --> 01:05:10,377 or they're such crooks that the CDOs are worth shit 1254 01:05:10,543 --> 01:05:12,112 and they're hiding it. 1255 01:05:14,447 --> 01:05:15,915 I think we should buy more swaps. 1256 01:05:16,449 --> 01:05:17,517 What? 1257 01:05:17,584 --> 01:05:19,586 Suck it up and pay up, fellas. We made a deal. 1258 01:05:19,686 --> 01:05:21,721 No way! No! 1259 01:05:21,788 --> 01:05:23,223 Are you ****ing kidding me? 1260 01:05:23,289 --> 01:05:25,625 Are you serious? You think this is a game? 1261 01:05:25,725 --> 01:05:28,395 - No. No. No. No. No. - Yeah. Yeah. 1262 01:05:34,934 --> 01:05:36,603 No! No! No! 1263 01:05:36,736 --> 01:05:38,405 No, seriously, a colonic once a year. 1264 01:05:38,471 --> 01:05:39,472 ***! 1265 01:05:39,572 --> 01:05:42,575 And you got a matching little butler boy, you butt****! 1266 01:05:46,246 --> 01:05:48,810 - Are you done? - I think so, yeah. 1267 01:05:48,148 --> 01:05:50,917 God! I pulled a muscle in my back from yelling. 1268 01:05:53,486 --> 01:05:56,823 Mortgage defaults have done nothing but go up. 1269 01:05:57,157 --> 01:06:00,326 Yet you quote us a higher price on the bonds. 1270 01:06:01,227 --> 01:06:03,329 Please explain that to me. There's no way that makes sense. 1271 01:06:03,430 --> 01:06:06,433 There's no way you're marking these swaps appropriately. 1272 01:06:07,100 --> 01:06:09,690 Why shouldn't we back out of this trade right now? 1273 01:06:11,504 --> 01:06:14,941 Didn't I say when we made this deal that the ratings agencies, the SEC 1274 01:06:15,800 --> 01:06:17,510 and the big banks were clueless? Didn't I say that? 1275 01:06:17,610 --> 01:06:18,912 - Yes. - Didn't I say it? 1276 01:06:18,978 --> 01:06:20,814 Yes, you did. You did. 1277 01:06:20,947 --> 01:06:22,415 Shut up. 1278 01:06:22,482 --> 01:06:23,817 Now their foot's on fire, they think 1279 01:06:23,917 --> 01:06:25,452 their steak is done, and you're surprised? 1280 01:06:25,518 --> 01:06:28,321 That's not stupidity. That's fraud. 1281 01:06:28,421 --> 01:06:30,123 Tell me the difference between stupid and illegal, 1282 01:06:30,190 --> 01:06:32,192 and I'll have my wife's brother arrested. 1283 01:06:34,940 --> 01:06:35,950 That was funny. 1284 01:06:35,195 --> 01:06:38,865 I guess you just don't realize how clueless the system really is. 1285 01:06:38,965 --> 01:06:41,301 Yes, there's some shady shit going down, 1286 01:06:41,368 --> 01:06:44,704 but trust me, it's fueled by stupidity! 1287 01:06:45,939 --> 01:06:47,273 Look at yourselves. 1288 01:06:48,410 --> 01:06:51,511 You know, you pass yourself off as cynical people 1289 01:06:51,611 --> 01:06:53,980 but you still have some faith in the system, don't you? 1290 01:06:54,470 --> 01:06:55,348 I don't. 1291 01:06:55,448 --> 01:06:58,318 Well, except for Vinnie. And who gives a shit? 1292 01:06:58,385 --> 01:07:00,153 - No way! - Look... 1293 01:07:00,220 --> 01:07:03,390 Either we're right or we're wrong in a giant, giant way. 1294 01:07:03,490 --> 01:07:05,358 And if we're wrong, then we got to find someone 1295 01:07:05,458 --> 01:07:07,600 to help us get out of this trade. 1296 01:07:07,160 --> 01:07:09,896 I'm not feeling remotely confident that we're right. 1297 01:07:09,996 --> 01:07:13,400 And if we're wrong, who's gonna tell us? 1298 01:07:13,500 --> 01:07:16,903 Who understands this stuff? It makes no sense! 1299 01:07:19,372 --> 01:07:21,174 I think we need to go to Vegas. 1300 01:07:21,241 --> 01:07:23,410 - What's in Vegas? - Vegas? 1301 01:07:23,510 --> 01:07:25,378 What the hell's in Las Vegas? 1302 01:07:26,479 --> 01:07:29,683 The American Securitization Forum is there next week. 1303 01:07:29,749 --> 01:07:32,185 Every bond and CDO salesman, subprime lender 1304 01:07:32,252 --> 01:07:34,354 and swap trader is gonna be there. 1305 01:07:34,421 --> 01:07:37,190 I'm telling you, your bet is against dumb money. 1306 01:07:37,257 --> 01:07:40,930 It's about time you find out just how dumb that money really is. 1307 01:07:40,193 --> 01:07:41,327 God, I hate Vegas. 1308 01:07:41,428 --> 01:07:42,862 I hear the food has gotten really good in Vegas. 1309 01:07:42,929 --> 01:07:44,431 They have a Nobu now. 1310 01:07:44,531 --> 01:07:45,899 Would you ****ing stop it? 1311 01:08:24,871 --> 01:08:25,872 Any sense? 1312 01:08:26,390 --> 01:08:27,540 And if a bond is "rich" it is... 1313 01:08:27,874 --> 01:08:30,977 - I don't know, loaded with assets? - "Rich" just means overpriced. 1314 01:08:31,440 --> 01:08:33,130 I can't sleep on planes, so I did my homework. 1315 01:08:33,113 --> 01:08:35,515 Okay, let's focus. What's our goal? 1316 01:08:35,615 --> 01:08:37,951 To figure out if this is a deal of a lifetime 1317 01:08:38,180 --> 01:08:39,819 or if everyone here knows something we don't 1318 01:08:39,886 --> 01:08:41,721 and we're gonna get royally screwed. 1319 01:08:41,821 --> 01:08:44,557 Right. Remember that when you meet with the guys from Bear. 1320 01:08:44,724 --> 01:08:46,493 I set you up with a face-to-face. 1321 01:08:46,559 --> 01:08:47,861 - Awesome. - Where is that? 1322 01:08:47,961 --> 01:08:52,298 Holy shit. Five years ago, Securitization was a loser convention. 1323 01:08:52,365 --> 01:08:54,467 100, maybe 200 people would show. 1324 01:08:54,567 --> 01:08:56,736 $500 billion a year later, you get this. 1325 01:08:56,836 --> 01:08:58,471 There's a lot of smug-looking people in here, huh? 1326 01:08:58,538 --> 01:09:02,800 It's like someone hit a piñata filled with white people who suck at golf. 1327 01:09:02,750 --> 01:09:03,576 I mean, who are all these clowns? 1328 01:09:03,677 --> 01:09:05,450 Come on. I think it looks fun. 1329 01:09:05,145 --> 01:09:08,581 Certainly. Vennett says these are the people we're betting against. 1330 01:09:08,682 --> 01:09:10,550 - Yeah, here we go. Here we go. - There he is. 1331 01:09:10,650 --> 01:09:12,385 Chris, on my left. Chris, on my left. 1332 01:09:12,852 --> 01:09:13,987 Gentlemen. 1333 01:09:14,540 --> 01:09:17,657 When do we get a chance to face time with some of these lovely folks? 1334 01:09:17,724 --> 01:09:19,159 Chris, give him the keycards. 1335 01:09:19,259 --> 01:09:20,493 Do you even know which keycards you're giving out? 1336 01:09:20,560 --> 01:09:21,561 - You're just giving them out? - Thank you. 1337 01:09:21,661 --> 01:09:24,364 First of all, how was your travel? How are you? Uneventful? 1338 01:09:24,431 --> 01:09:25,665 - Uneventful. - Okay. 1339 01:09:25,732 --> 01:09:27,434 I've been here for six hours. I've already been to the gym, 1340 01:09:27,534 --> 01:09:28,868 I had two poached eggs 1341 01:09:28,935 --> 01:09:30,570 and I played blackjack with Harry Dean Stanton. 1342 01:09:30,670 --> 01:09:32,105 Thank you for your diary. 1343 01:09:32,572 --> 01:09:34,207 Face time. I'd like some face time. 1344 01:09:34,274 --> 01:09:35,742 Just remember. We're here to gather information. 1345 01:09:35,842 --> 01:09:37,243 We're gathering information, okay? 1346 01:09:37,344 --> 01:09:39,713 We're not advertising our short position. All right? 1347 01:09:39,779 --> 01:09:41,414 We don't want to spook everybody. Can you do that? 1348 01:09:41,514 --> 01:09:43,490 I know you got a big mouth, you like to run it. 1349 01:09:43,116 --> 01:09:44,951 Can you just keep it shut for a few days? 1350 01:09:45,510 --> 01:09:46,860 Okay. Okay. 1351 01:09:46,186 --> 01:09:48,210 Yeah, don't worry. We'll play nice. 1352 01:09:48,121 --> 01:09:49,422 Ladies and gentlemen. 1353 01:09:49,522 --> 01:09:51,725 Business is good. 1354 01:09:51,791 --> 01:09:53,226 Profits are strong 1355 01:09:53,293 --> 01:09:56,229 and the mortgage continues to be the bedrock 1356 01:09:56,296 --> 01:09:58,631 on which this economy is built. 1357 01:10:03,303 --> 01:10:04,904 And, yes, we had to take some losses 1358 01:10:04,971 --> 01:10:08,274 in our subprime department last year, but those losses 1359 01:10:08,375 --> 01:10:10,977 will be contained at only 5%. 1360 01:10:11,144 --> 01:10:13,279 Now, in our residential sector... 1361 01:10:13,380 --> 01:10:14,547 Mark, it's not a Q and A. 1362 01:10:14,647 --> 01:10:16,316 ...our rollout of those variable rate packages 1363 01:10:16,416 --> 01:10:18,510 were gobbled up by the consumers! 1364 01:10:18,151 --> 01:10:20,220 I have a question, please. 1365 01:10:23,156 --> 01:10:25,258 Sir, the Q and A is after my statements. 1366 01:10:25,325 --> 01:10:27,761 But you know what? You seem anxious. How can I help you? 1367 01:10:27,827 --> 01:10:29,763 - Thank you. How are you? - Fine, thank you. 1368 01:10:29,829 --> 01:10:32,966 Would you say that it is a possibility 1369 01:10:33,660 --> 01:10:37,671 or a probability that subprime losses stop at 5%? 1370 01:10:37,904 --> 01:10:38,972 Thank you. 1371 01:10:39,720 --> 01:10:43,843 I would say it is a very strong probability, indeed. 1372 01:10:44,344 --> 01:10:46,913 So back to the residential sector. 1373 01:10:47,130 --> 01:10:49,115 When we rolled out the new variable rates package... 1374 01:10:49,182 --> 01:10:50,784 Excuse me. 1375 01:10:53,186 --> 01:10:54,287 Yes, sir. 1376 01:10:54,354 --> 01:10:57,757 Zero! Zero! 1377 01:10:57,857 --> 01:11:00,627 There is a 0% chance 1378 01:11:00,694 --> 01:11:04,497 that your subprime losses will stop at 5%. 1379 01:11:04,597 --> 01:11:05,665 Zero. 1380 01:11:05,765 --> 01:11:07,300 Excuse me. 1381 01:11:07,367 --> 01:11:08,435 I have to take this. 1382 01:11:08,501 --> 01:11:10,470 He must be from Bank of America. 1383 01:11:12,172 --> 01:11:14,841 - Our subprime department is fine. - No, I'm not doing anything right now. 1384 01:11:14,941 --> 01:11:16,476 As I was saying, our residential department... 1385 01:11:16,543 --> 01:11:17,711 How are the kids? 1386 01:11:17,844 --> 01:11:20,213 ...consumers reacted to our packages... 1387 01:11:20,313 --> 01:11:21,981 Mark Baum really did that. 1388 01:11:22,480 --> 01:11:23,316 When we were in Vegas, he did that. 1389 01:11:23,383 --> 01:11:25,552 He said that, he took the call. 1390 01:11:26,190 --> 01:11:27,721 Now you see what I had to deal with? 1391 01:11:41,401 --> 01:11:43,536 Yeah, the Beretta... Meh. 1392 01:11:43,636 --> 01:11:45,839 But this Uzi is ****ing awesome! 1393 01:11:45,905 --> 01:11:48,508 I need this CDO machine to run for another two years. 1394 01:11:48,575 --> 01:11:51,845 And then I'm rich as **** and I got my house in Aspen. 1395 01:11:51,911 --> 01:11:55,148 But do you have any concerns about the performance 1396 01:11:55,215 --> 01:11:56,816 of the underlying securitizations? 1397 01:11:56,883 --> 01:11:58,685 It's easy to see that delinquencies 1398 01:11:58,752 --> 01:12:01,654 and default rates are on the rise right now. 1399 01:12:01,721 --> 01:12:03,890 Could you please stop being such a buzzkill, dude? 1400 01:12:04,257 --> 01:12:06,826 We didn't bring you out here to talk about work, bro. 1401 01:12:06,893 --> 01:12:08,361 Why did you bring us out here? 1402 01:12:08,428 --> 01:12:11,664 Because we need to be able to expense the ammo to a client. 1403 01:12:11,931 --> 01:12:12,999 These guys are morons. 1404 01:12:14,100 --> 01:12:16,569 - ****, yes! Boom! - Yeah, man! 1405 01:12:16,669 --> 01:12:19,390 We need to be buying up every swap we can get our hands on here. 1406 01:12:19,105 --> 01:12:21,408 Just hold on, okay? Hold on. 1407 01:12:21,508 --> 01:12:23,777 My brother's ex-girlfriend works for the SEC. 1408 01:12:23,910 --> 01:12:25,745 She just told me she's in town, okay? 1409 01:12:25,845 --> 01:12:27,947 So, if we're missing something, maybe she can tell me. 1410 01:12:28,810 --> 01:12:29,716 You know, give me some insight. 1411 01:12:29,783 --> 01:12:31,551 In the meantime, you go to the main floor 1412 01:12:31,618 --> 01:12:33,353 and price some swaps. 1413 01:12:33,787 --> 01:12:37,791 Well, actually, we're about to invest in housing bonds, and... 1414 01:12:37,891 --> 01:12:40,560 I was wondering if the SEC is worried about them at all. 1415 01:12:40,627 --> 01:12:43,396 I know you're not allowed to tell me specifics, but just generally. 1416 01:12:43,463 --> 01:12:45,699 We don't investigate mortgage bonds. 1417 01:12:45,765 --> 01:12:49,102 Truth is, since we got our budget cut, we don't investigate much. 1418 01:12:51,137 --> 01:12:54,107 - Then why are you here? I thought... - I'm not here for the SEC. 1419 01:12:54,207 --> 01:12:55,875 I'm here on my own dime. 1420 01:12:56,810 --> 01:13:00,460 I'm floating my resume to some big banks. 1421 01:13:00,113 --> 01:13:01,715 How's your brother, by the way? 1422 01:13:01,781 --> 01:13:03,650 How are you floating your resume to big banks? 1423 01:13:03,750 --> 01:13:06,619 I mean, you're supposed to be the ones, you know, policing the big banks. 1424 01:13:06,653 --> 01:13:08,880 Grow up, Jamie. 1425 01:13:08,154 --> 01:13:11,925 There must be some kind of law against working for a financial institution 1426 01:13:11,991 --> 01:13:15,228 right after you've been working in financial regulation, right? 1427 01:13:15,295 --> 01:13:17,397 No. No. 1428 01:13:18,898 --> 01:13:21,000 Hey! Dougie! 1429 01:13:21,835 --> 01:13:24,804 Hey! Come over here. What are you doing at Caesars? 1430 01:13:24,904 --> 01:13:26,406 He's at Goldman. 1431 01:13:27,700 --> 01:13:28,740 See you. 1432 01:13:28,141 --> 01:13:33,179 We can do BBB-level swaps at 500 basis points. Maybe. 1433 01:13:33,279 --> 01:13:37,830 You're pricing the swaps like the bond is gonna collapse 1434 01:13:37,150 --> 01:13:39,519 even though the bond value's going up? Really? 1435 01:13:40,860 --> 01:13:41,154 Sign of the times. 1436 01:13:41,254 --> 01:13:42,288 What the hell is going on? 1437 01:14:41,147 --> 01:14:44,918 Lewis, can you come in early tomorrow, please? 1438 01:14:45,180 --> 01:14:47,320 I need to unload the AIG and Countrywide 1439 01:14:47,387 --> 01:14:48,855 and Freddie Mac positions 1440 01:14:48,922 --> 01:14:51,424 so that we can afford the premiums on the... 1441 01:14:52,692 --> 01:14:55,595 ...core mortgage shorts on the swaps. 1442 01:14:56,620 --> 01:14:57,564 No problem, Dr. Burry. 1443 01:14:59,599 --> 01:15:00,767 Dr. Burry? 1444 01:15:04,371 --> 01:15:05,405 If the investors withdraw, 1445 01:15:05,505 --> 01:15:08,241 what's going to happen here? Are we done? 1446 01:15:08,375 --> 01:15:10,276 Honestly, I don't know. 1447 01:15:17,951 --> 01:15:20,220 The bonds aren't going down. 1448 01:15:21,454 --> 01:15:24,124 They won't move. It's possible 1449 01:15:24,557 --> 01:15:29,129 that we are in a completely fraudulent system. 1450 01:15:30,563 --> 01:15:33,233 Or... You're wrong. 1451 01:15:37,971 --> 01:15:39,720 Sure. 1452 01:15:39,806 --> 01:15:43,810 It's possible I'm wrong. I just don't know how. 1453 01:15:48,548 --> 01:15:52,719 I guess when someone's wrong, they never... 1454 01:15:53,860 --> 01:15:55,321 They never know how. 1455 01:15:59,626 --> 01:16:01,828 - See you in the morning. - Yeah. 1456 01:16:03,630 --> 01:16:05,632 Even Bear upped their prices. 1457 01:16:06,232 --> 01:16:08,735 And they keep calling us Brownhole. 1458 01:16:08,802 --> 01:16:10,437 You just don't have the money or the reputation. 1459 01:16:10,503 --> 01:16:11,838 Don't take it personally. 1460 01:16:11,971 --> 01:16:13,273 I don't think I have the strip club in me tonight. 1461 01:16:13,340 --> 01:16:17,100 I'm just gonna get some ginger ale and watch some pay-per-view. 1462 01:16:17,110 --> 01:16:19,479 I'll book us some flights out for the morning. 1463 01:16:20,914 --> 01:16:23,516 A deal. We need a deal, right? A deal. 1464 01:16:23,616 --> 01:16:25,418 We need a deal we can afford. 1465 01:16:25,518 --> 01:16:27,821 We need a deal that they're not gonna refuse. 1466 01:16:27,921 --> 01:16:31,257 So... What can we do? We can... 1467 01:16:32,525 --> 01:16:35,462 The AA tranches. What if we bet against the AA tranches? 1468 01:16:35,528 --> 01:16:36,863 Who's not gonna take that bet? 1469 01:16:37,597 --> 01:16:40,500 We know they say they're 95% AAA-rated, 1470 01:16:40,600 --> 01:16:42,602 but in reality they're more like 25%. 1471 01:16:42,669 --> 01:16:45,105 Some of them are 0%! 1472 01:16:45,171 --> 01:16:47,807 We also know that if the bottom tranches fail at over 8%, 1473 01:16:47,874 --> 01:16:49,420 the upper tranches are affected. 1474 01:16:49,142 --> 01:16:50,343 They go to zero. 1475 01:16:50,610 --> 01:16:53,546 I'll bet you right now that those AA's are actually like B's. 1476 01:16:54,140 --> 01:16:57,117 I rarely ever say these words, but I think Charlie's right. 1477 01:16:57,450 --> 01:16:59,119 Look, Ben. 1478 01:17:00,787 --> 01:17:02,188 The payoff 1479 01:17:02,689 --> 01:17:04,124 is 200 to 1. 1480 01:17:04,190 --> 01:17:06,226 But they're all taking the ratings at face value. 1481 01:17:06,359 --> 01:17:09,729 So they're charging pennies on the dollar a bet against the AA's. 1482 01:17:11,364 --> 01:17:14,200 Just when I start thinking you guys are clowns... 1483 01:17:14,300 --> 01:17:16,803 No one on the planet's betting against AA's. 1484 01:17:16,870 --> 01:17:19,806 The banks will think we're either high or having a stroke. 1485 01:17:19,873 --> 01:17:22,208 They'll take every dime we have to offer. 1486 01:17:24,811 --> 01:17:26,146 Kinda brilliant. 1487 01:17:27,914 --> 01:17:30,160 This is what we did that no one else thought of. 1488 01:17:30,830 --> 01:17:33,190 Not even Baum or Burry thought to short the AA's. 1489 01:17:33,860 --> 01:17:34,487 But we did. 1490 01:17:34,554 --> 01:17:36,890 Little Brownhole Capital. 1491 01:17:36,423 --> 01:17:41,361 We're interested in shorting some of the AA tranche of CDOs. 1492 01:17:41,428 --> 01:17:43,229 Come on, guys, what's the angle? 1493 01:17:43,329 --> 01:17:45,598 Oh, got no angle. We're new to this. We're just excited. 1494 01:17:45,732 --> 01:17:49,436 We want to do $15 million in swaps on the AA tranche. 1495 01:17:49,903 --> 01:17:51,400 I don't understand. 1496 01:17:51,710 --> 01:17:53,707 You can buy as much AA tranche as you want. 1497 01:17:55,909 --> 01:17:58,440 $40 million against the AA. 1498 01:17:58,111 --> 01:18:00,347 Brother, I will sell you as much as you want. 1499 01:18:00,613 --> 01:18:02,849 You understand perfectly, Bob. You want the deal? 1500 01:18:05,180 --> 01:18:07,200 That's cool. That's all right with me. 1501 01:18:09,222 --> 01:18:10,423 Pleasure. 1502 01:18:18,631 --> 01:18:20,567 Don't do that. Stop. Stop. 1503 01:18:21,267 --> 01:18:22,469 - Stop that. - Charlie. 1504 01:18:23,203 --> 01:18:24,637 Stop it! Stop. 1505 01:18:27,730 --> 01:18:28,141 What? 1506 01:18:29,576 --> 01:18:31,144 Do you have any idea what you just did? 1507 01:18:31,378 --> 01:18:33,460 Come on. We just made the deal of our lifetimes! 1508 01:18:33,113 --> 01:18:34,280 We should celebrate. 1509 01:18:34,381 --> 01:18:36,282 You just bet against the American economy. 1510 01:18:36,383 --> 01:18:37,884 ****, yeah, we did! 1511 01:18:37,951 --> 01:18:39,919 - ****, yeah! - Which means... 1512 01:18:39,986 --> 01:18:42,655 Which means if we're right... 1513 01:18:43,723 --> 01:18:47,930 If we're right, people lose homes. People lose jobs. 1514 01:18:47,160 --> 01:18:50,330 People lose retirement savings. People lose pensions. 1515 01:18:50,463 --> 01:18:51,631 You know what I hate about ****ing banking? 1516 01:18:51,731 --> 01:18:53,266 It reduces people to numbers. Here's a number. 1517 01:18:53,333 --> 01:18:56,169 Every 1% unemployment goes up, 40,000 people die. Did you know that? 1518 01:18:56,269 --> 01:18:57,771 - No. - Did you know that? 1519 01:18:57,837 --> 01:18:59,439 No, I didn't know that. 1520 01:19:00,907 --> 01:19:02,575 We were just excited. 1521 01:19:04,978 --> 01:19:06,980 Just don't ****ing dance. 1522 01:19:07,647 --> 01:19:09,482 - All right. - Where are you going? 1523 01:19:13,853 --> 01:19:16,220 Whoa, I just got really scared. 1524 01:19:17,590 --> 01:19:19,492 First of all, great show today. 1525 01:19:19,592 --> 01:19:21,270 - You were terrific. - Thank you. 1526 01:19:21,127 --> 01:19:22,762 Your big mouth was a revelation. 1527 01:19:22,829 --> 01:19:24,531 I appreciate that. 1528 01:19:24,664 --> 01:19:26,433 You worried you and your swaps are getting played? 1529 01:19:26,499 --> 01:19:29,636 Well, this is an opportunity for you to meet who you're betting against. 1530 01:19:29,703 --> 01:19:31,504 Try not to get too righteous and listen a little. 1531 01:19:31,604 --> 01:19:32,972 Okay, fine. Who is this guy? 1532 01:19:33,106 --> 01:19:34,774 A real solid-gold ***hole. 1533 01:19:34,941 --> 01:19:37,177 - I'm a CDO manager. - A "CDO manager"? 1534 01:19:37,277 --> 01:19:38,678 Yeah, at Harding Advisors. 1535 01:19:39,279 --> 01:19:42,382 I didn't realize that there was anything to manage with CDOs. 1536 01:19:45,118 --> 01:19:47,654 We select the securities that go into the CDO portfolio 1537 01:19:47,721 --> 01:19:49,122 and monitor the assets. 1538 01:19:49,189 --> 01:19:50,990 I do most of Merrill Lynch's CDOs. 1539 01:19:51,570 --> 01:19:54,270 Do you represent the investors or Merrill Lynch? 1540 01:19:54,127 --> 01:19:56,196 - The investors. - You do. 1541 01:19:56,363 --> 01:19:57,697 - Yeah. - But... 1542 01:19:57,897 --> 01:19:59,799 Merrill Lynch isn't gonna send you any customers 1543 01:19:59,866 --> 01:20:03,403 unless you put Merrill Lynch's bonds in your CDO. 1544 01:20:04,537 --> 01:20:07,240 Good question. Let's just say Merrill and I have... 1545 01:20:07,874 --> 01:20:09,976 We have a good relationship. 1546 01:20:10,760 --> 01:20:12,312 You have a good relationship with Merrill Lynch. 1547 01:20:12,379 --> 01:20:14,470 We've been doing business together for a long time. 1548 01:20:14,147 --> 01:20:16,583 And so the CDOs that you create 1549 01:20:16,716 --> 01:20:20,653 are of the highest quality and the highest value. 1550 01:20:20,720 --> 01:20:22,655 - Absolutely. Yep. - Absolutely. 1551 01:20:22,722 --> 01:20:26,259 Are you at all concerned about the rising default rates? 1552 01:20:28,228 --> 01:20:31,398 I assume no risk for these products myself, Mark. 1553 01:20:34,670 --> 01:20:35,235 Okay. 1554 01:20:36,836 --> 01:20:40,600 So let me get this straight. The bank calls you up. 1555 01:20:40,573 --> 01:20:42,108 They give you the bonds they want to sell. 1556 01:20:42,208 --> 01:20:43,543 They give you clients, 1557 01:20:43,610 --> 01:20:46,120 they give you money to run your business. 1558 01:20:46,790 --> 01:20:47,781 Give you fat fees for doing so. 1559 01:20:47,881 --> 01:20:49,883 But you represent the investors? 1560 01:20:51,418 --> 01:20:53,620 - Is that right? - Yeah. 1561 01:20:53,720 --> 01:20:55,188 But we're not in the Merrill Lynch building. 1562 01:20:55,255 --> 01:20:56,856 - Okay. Where are you? - We're in New Jersey. 1563 01:20:56,923 --> 01:20:59,250 You're 20 minutes away. 1564 01:20:59,920 --> 01:21:01,270 Well, five if you use a helicopter. 1565 01:21:02,896 --> 01:21:05,298 - That's funny, huh? - That's hilarious. 1566 01:21:08,535 --> 01:21:09,569 Oh, boy. 1567 01:21:09,936 --> 01:21:12,138 Your boss is about to explode. 1568 01:21:12,238 --> 01:21:13,873 No, he's too curious to explode. 1569 01:21:13,940 --> 01:21:15,408 Hold on. Say that again. 1570 01:21:15,475 --> 01:21:17,610 CDO "A" has parts of CDO "B". 1571 01:21:17,711 --> 01:21:19,612 And CDO "B" has parts of CDO "A". 1572 01:21:19,713 --> 01:21:21,948 But then they both get put inside CDO "C". 1573 01:21:22,480 --> 01:21:23,783 Yeah, that one's called CDO squared. 1574 01:21:23,883 --> 01:21:25,952 A CDO of a CDO. 1575 01:21:26,386 --> 01:21:27,387 All right? 1576 01:21:27,554 --> 01:21:29,489 And then there's CDOs made up of the opposite side 1577 01:21:29,589 --> 01:21:31,124 of the bet you made with your swaps. 1578 01:21:31,391 --> 01:21:33,660 We call them synthetic CDOs. 1579 01:21:33,793 --> 01:21:35,962 What did you say? Synthetic CDOs. 1580 01:21:36,620 --> 01:21:39,566 - That is ****ing crazy. - It's not. It's awesome. 1581 01:21:40,967 --> 01:21:44,471 His face is starting to boil. He looks like the bad guy from Dune. 1582 01:21:48,575 --> 01:21:50,477 All right, let's say 1583 01:21:50,977 --> 01:21:54,314 you have a pool of $50 million in subprime loans. 1584 01:21:54,647 --> 01:21:57,250 How much money could be out there betting on it, 1585 01:21:57,317 --> 01:22:00,120 in your synthetic CDOs and swaps 1586 01:22:00,186 --> 01:22:01,788 right now, tonight? 1587 01:22:01,855 --> 01:22:04,491 Let's see, $50 million... 1588 01:22:05,492 --> 01:22:07,494 - A billion dollars. - What? 1589 01:22:08,661 --> 01:22:10,597 If the mortgage bonds that Michael Burry discovered 1590 01:22:10,663 --> 01:22:11,998 were the match... 1591 01:22:13,433 --> 01:22:15,835 How much bigger is the market for insuring mortgage bonds 1592 01:22:15,935 --> 01:22:17,370 than actual mortgages? 1593 01:22:18,538 --> 01:22:19,706 About 20 times. 1594 01:22:19,873 --> 01:22:21,975 If the mortgage bonds were the match 1595 01:22:22,420 --> 01:22:24,778 and the CDOs were the kerosene-soaked rags, 1596 01:22:24,844 --> 01:22:26,880 then the synthetic CDO was the atomic bomb 1597 01:22:26,980 --> 01:22:28,682 with the drunk President holding his finger 1598 01:22:28,782 --> 01:22:29,949 over the button. 1599 01:22:30,160 --> 01:22:32,285 It was at that moment in that dumb restaurant 1600 01:22:32,352 --> 01:22:35,522 with that stupid look on his face that Mark Baum realized 1601 01:22:35,622 --> 01:22:38,240 that the whole world economy might collapse. 1602 01:22:41,661 --> 01:22:43,563 And I know what you're thinking. 1603 01:22:43,663 --> 01:22:45,999 "What the **** is a synthetic CDO?" 1604 01:22:48,368 --> 01:22:52,500 Well, here's Dr. Richard Thaler, father of behavioral economics 1605 01:22:52,720 --> 01:22:54,708 and Selena Gomez to explain. 1606 01:22:55,410 --> 01:22:58,211 Okay. So here's how a synthetic CDO works. 1607 01:22:58,311 --> 01:23:01,181 Let's say I bet $10 million on a blackjack hand. 1608 01:23:01,247 --> 01:23:03,750 $10 million because this hand is meant to represent 1609 01:23:04,150 --> 01:23:06,386 a single mortgage bond. 1610 01:23:09,356 --> 01:23:12,759 Okay, Selena has a pretty good hand here, showing 18. 1611 01:23:12,892 --> 01:23:13,893 Dealer showing seven. 1612 01:23:13,993 --> 01:23:16,290 That's a really good hand for Selena. 1613 01:23:16,960 --> 01:23:17,530 Good odds. In fact, her chances of winning 1614 01:23:17,597 --> 01:23:19,999 this hand are 87%. 1615 01:23:20,660 --> 01:23:23,436 So, my odds are good. I'm on a winning streak. 1616 01:23:23,536 --> 01:23:26,206 Everybody in this place wants to get in on the action. 1617 01:23:26,272 --> 01:23:27,674 How could I lose, right? 1618 01:23:27,741 --> 01:23:29,242 Now, this is a classic error. 1619 01:23:29,342 --> 01:23:32,278 In basketball it's called the Hot Hand Fallacy. 1620 01:23:32,379 --> 01:23:34,914 A player makes a bunch of shots in a row. 1621 01:23:35,150 --> 01:23:37,283 People are sure they're gonna make the next one. 1622 01:23:37,384 --> 01:23:39,352 People think that whatever's happening now 1623 01:23:39,419 --> 01:23:42,188 is gonna continue to happen into the future. 1624 01:23:42,255 --> 01:23:45,592 During the real estate boom, markets were going up and up 1625 01:23:45,692 --> 01:23:47,394 and people thought they would never go down. 1626 01:23:47,427 --> 01:23:49,963 So people who are watching and think that I won't lose 1627 01:23:50,630 --> 01:23:51,531 will make a side bet. 1628 01:23:51,598 --> 01:23:53,867 Now, this is the first synthetic CDO. 1629 01:23:53,933 --> 01:23:55,535 I love Selena Gomez. 1630 01:23:55,602 --> 01:23:57,103 I bet you $50 million she wins. 1631 01:23:57,203 --> 01:23:59,272 And I'll give you 3-to-1 odds. 1632 01:23:59,372 --> 01:24:03,209 3-to-1 odds? Okay, I'll take that bet. 1633 01:24:03,276 --> 01:24:06,613 Now, somebody else is gonna want to make a bet 1634 01:24:06,713 --> 01:24:09,115 - on the outcome of their bet. - Bet you 50 million she wins. 1635 01:24:09,215 --> 01:24:12,152 That will lead to synthetic CDO number two. 1636 01:24:12,252 --> 01:24:15,422 Hey, I bet you $200 million that lady in the glasses 1637 01:24:15,588 --> 01:24:17,900 wins that bet. 1638 01:24:17,257 --> 01:24:20,326 She probably will win. So I want a great payoff. 1639 01:24:20,493 --> 01:24:22,829 - How about 20-to-1? - Deal. 1640 01:24:23,163 --> 01:24:27,467 And this will go on and on with more and more synthetic CDOs. 1641 01:24:27,567 --> 01:24:31,604 And we can transform an original $10 million investment 1642 01:24:31,771 --> 01:24:33,673 into billions of dollars. 1643 01:24:34,607 --> 01:24:35,942 You okay? 1644 01:24:37,344 --> 01:24:38,345 No. 1645 01:24:39,746 --> 01:24:41,581 I actually feel pretty sick. 1646 01:24:46,786 --> 01:24:48,688 So I'm going to leave. 1647 01:24:50,290 --> 01:24:52,525 You think I'm a parasite, don't you, Mr. Baum? 1648 01:24:53,259 --> 01:24:57,163 But, apparently, society values me very much. 1649 01:24:58,198 --> 01:24:59,966 In fact, let's do this. 1650 01:25:02,100 --> 01:25:05,400 I'll tell you how much I'm worth. 1651 01:25:05,538 --> 01:25:07,400 You tell me how much you're worth. 1652 01:25:08,274 --> 01:25:13,346 God, you are an incredibly big piece of shit. 1653 01:25:19,119 --> 01:25:20,987 Short everything that guy has touched. 1654 01:25:21,540 --> 01:25:22,689 I want half a billion more in swaps. 1655 01:25:23,223 --> 01:25:25,492 You sure about that? The collateral calls could bankrupt you. 1656 01:25:25,558 --> 01:25:27,527 - Yeah. Yeah. - Where are you going? 1657 01:25:27,627 --> 01:25:30,663 I am going to try to find moral redemption 1658 01:25:30,730 --> 01:25:32,565 at the roulette table. 1659 01:26:36,763 --> 01:26:38,131 Hey, hey, hey! 1660 01:26:42,235 --> 01:26:43,703 Things are worse than I thought. 1661 01:26:45,805 --> 01:26:47,741 I honestly think the economy might collapse. 1662 01:26:48,141 --> 01:26:49,275 But you've been saying 1663 01:26:49,376 --> 01:26:52,445 that the system's broken for years, Mark. So... 1664 01:26:52,912 --> 01:26:54,814 Why are you so shocked? 1665 01:26:57,317 --> 01:27:00,754 It's more twisted than I could have imagined. 1666 01:27:00,820 --> 01:27:02,722 You love to be the virtuous one. 1667 01:27:03,156 --> 01:27:04,758 I'm a banker. I'm a part of it. 1668 01:27:04,824 --> 01:27:07,127 You always have, Mark. Like you're untainted. 1669 01:27:07,227 --> 01:27:10,663 It changed me. It changed me into a person 1670 01:27:11,264 --> 01:27:13,990 who is not able to reach out to someone... 1671 01:27:13,166 --> 01:27:15,101 He was in pain. My brother was in real pain. 1672 01:27:15,668 --> 01:27:18,400 There's no perfect way to help. 1673 01:27:21,700 --> 01:27:23,476 It's sad. It's scary. 1674 01:27:23,610 --> 01:27:26,780 So stop trying to fix the world. 1675 01:27:26,846 --> 01:27:27,947 He told me... 1676 01:27:28,140 --> 01:27:29,349 You're not a saint. 1677 01:27:29,449 --> 01:27:31,184 Saints don't live on Park Avenue. 1678 01:27:31,418 --> 01:27:33,190 ...that he was having bad thoughts. 1679 01:27:33,119 --> 01:27:35,922 Just feel the feelings like the rest of us. 1680 01:27:36,256 --> 01:27:40,427 My first response was to offer him some money. 1681 01:27:40,760 --> 01:27:43,263 I offered him ****ing money! 1682 01:27:48,935 --> 01:27:51,538 His face was so smashed. 1683 01:28:10,623 --> 01:28:11,958 That's right. 1684 01:29:18,625 --> 01:29:19,959 Michael? 1685 01:29:20,600 --> 01:29:21,394 - Michael? - Yes. Yes. 1686 01:29:21,461 --> 01:29:23,563 - Is everything okay? - Yes, honey. 1687 01:29:23,630 --> 01:29:25,732 - You sure? - Yeah, baby. 1688 01:29:27,567 --> 01:29:28,868 I'm fine. 1689 01:29:37,811 --> 01:29:39,479 To all investors. 1690 01:29:39,579 --> 01:29:40,647 As you may know, 1691 01:29:41,648 --> 01:29:45,251 our agreement allows me to take extraordinary measures 1692 01:29:45,719 --> 01:29:48,621 when markets aren't functioning properly. 1693 01:29:48,722 --> 01:29:52,425 I currently have reason to believe the mortgage bond market 1694 01:29:53,930 --> 01:29:54,828 is fraudulent. 1695 01:29:56,996 --> 01:30:01,768 So, in order to protect investors from this fraudulent market, 1696 01:30:01,835 --> 01:30:05,105 I've decided to restrict investors' withdrawals 1697 01:30:05,171 --> 01:30:06,840 until further notice. 1698 01:30:07,173 --> 01:30:10,844 Sincerely, Dr. Michael J. Burry. 1699 01:31:07,100 --> 01:31:08,568 I never would have guessed my life 1700 01:31:08,635 --> 01:31:11,171 could change as much as it has since I moved to L.A. 1701 01:31:11,271 --> 01:31:13,640 It's not just, like, that easy to, like, not see you. 1702 01:31:13,740 --> 01:31:16,810 He lashed out at rumors he used performance enhancing drugs. 1703 01:31:17,100 --> 01:31:18,445 This record is not tainted. 1704 01:31:18,511 --> 01:31:19,679 Oh, my God, dude. 1705 01:31:19,779 --> 01:31:21,481 Will you please stop changing the channels? 1706 01:31:21,581 --> 01:31:23,183 - You're driving me crazy. - All right. 1707 01:31:23,283 --> 01:31:25,251 - Fine. - Just put the business news on. 1708 01:31:25,819 --> 01:31:28,455 - ...and the S&P picked up three points. - Jesus! 1709 01:31:28,521 --> 01:31:30,290 Mortgage meltdown continued today. 1710 01:31:30,357 --> 01:31:33,930 Subprime mortgage lender New Century Financial, 1711 01:31:33,193 --> 01:31:35,829 once the industry leader, by the way, filed for bankruptcy. 1712 01:31:35,929 --> 01:31:38,298 - The company immediately... - Whoa, whoa, whoa. 1713 01:31:38,465 --> 01:31:39,632 Good time for my voice to go... 1714 01:31:39,699 --> 01:31:41,968 Fired 3,200 workers. 1715 01:31:42,350 --> 01:31:44,371 The manufacturing index also fell in the month of March... 1716 01:31:44,471 --> 01:31:45,538 It's starting. 1717 01:31:45,638 --> 01:31:47,207 ...a warning that economic growth could slow. 1718 01:31:47,307 --> 01:31:50,310 The Institute of Supply Management also reported a rise in prices... 1719 01:31:50,377 --> 01:31:52,120 I'm gonna call my mom. 1720 01:31:54,280 --> 01:31:57,150 The principal source of the slowdown in economic growth... 1721 01:31:57,217 --> 01:31:59,285 Time and time and time again, 1722 01:31:59,386 --> 01:32:01,521 I have gone to bat for you, Mark! 1723 01:32:01,621 --> 01:32:02,889 We've known each other for seven years... 1724 01:32:02,989 --> 01:32:05,325 She's got some lungs on her. I'm impressed. 1725 01:32:06,493 --> 01:32:08,328 I can't help but enjoy it. 1726 01:32:09,229 --> 01:32:10,864 There's no ****ing way. There's no ****ing way 1727 01:32:10,964 --> 01:32:12,399 that the big banks are that stupid. 1728 01:32:13,400 --> 01:32:15,235 Bye, Kathy! 1729 01:32:19,906 --> 01:32:20,907 Well? 1730 01:32:22,142 --> 01:32:25,745 Kathy thinks that it would be a good idea if we sold our shorts. 1731 01:32:25,845 --> 01:32:26,846 What else is new? 1732 01:32:26,913 --> 01:32:28,815 And she said that Morgan Stanley will buy them. 1733 01:32:28,882 --> 01:32:29,883 Holy shit! 1734 01:32:30,583 --> 01:32:31,851 What did you say? 1735 01:32:31,918 --> 01:32:33,586 I told her we're not selling shit. 1736 01:32:39,759 --> 01:32:43,596 If you need the files for 2005... 1737 01:32:43,763 --> 01:32:46,766 Mr. Fields' suit is very specific to files from the past year. 1738 01:32:47,534 --> 01:32:50,270 Good. Then get out. Say hi to Lawrence for me. 1739 01:32:50,370 --> 01:32:51,538 Will do. 1740 01:32:54,574 --> 01:32:56,242 You can't call me back for a week? 1741 01:32:56,343 --> 01:32:58,178 I am so sorry, Mike. 1742 01:32:58,545 --> 01:33:01,715 Goldman had a systems failure. I lost a ton of messages. 1743 01:33:01,781 --> 01:33:03,850 Yeah, B of A said they had a power outage, 1744 01:33:03,950 --> 01:33:07,120 and Morgan Stanley said their server crashed. 1745 01:33:07,253 --> 01:33:08,388 That's weird. 1746 01:33:08,455 --> 01:33:11,240 Well, I would call it improbable. 1747 01:33:11,910 --> 01:33:14,627 So where do you have our position marked? 1748 01:33:15,462 --> 01:33:17,230 I think it's the same, Mike. 1749 01:33:17,297 --> 01:33:19,199 What? Can you explain that to me, please, 1750 01:33:19,265 --> 01:33:22,569 because how can the value of an insurance contract 1751 01:33:22,635 --> 01:33:26,873 not be affected by the demise of the very thing it insures? 1752 01:33:26,940 --> 01:33:29,743 They're independent markets. They're not always correlated. 1753 01:33:29,809 --> 01:33:30,810 I know it sounds odd, 1754 01:33:30,910 --> 01:33:33,380 but these are very complicated products. 1755 01:33:34,214 --> 01:33:36,820 They are correlated. 1756 01:33:36,149 --> 01:33:38,151 They're gonna lose their houses, they're gonna lose their jobs, 1757 01:33:38,251 --> 01:33:39,319 they're gonna lose their... 1758 01:33:42,122 --> 01:33:43,957 Will you listen to me? 1759 01:33:44,157 --> 01:33:46,793 This is like the end of capitalism. 1760 01:33:46,926 --> 01:33:50,263 This is like the Dark Ages all over again. 1761 01:33:51,297 --> 01:33:52,432 I don't want to talk to Dad. 1762 01:33:52,499 --> 01:33:55,680 Okay, I love you, too. Save your money. 1763 01:33:55,769 --> 01:33:59,773 She says I need to be on Xanax and double my dose of Zoloft. 1764 01:33:59,939 --> 01:34:01,908 I asked Bear Stearns to price our shorts. 1765 01:34:01,975 --> 01:34:03,610 They tell me the CDOs still haven't moved. 1766 01:34:03,643 --> 01:34:05,445 This is ****ing insane! 1767 01:34:05,512 --> 01:34:07,130 You realize that? These people are crooks 1768 01:34:07,113 --> 01:34:09,149 and they should be in prison. 1769 01:34:09,315 --> 01:34:10,450 Look at the TABX. 1770 01:34:10,517 --> 01:34:12,352 You can see that the CDOs are worth zero! 1771 01:34:12,452 --> 01:34:14,621 So you know what they're doing, huh? You know what they're doing, right? 1772 01:34:14,754 --> 01:34:16,423 Yeah. They're unloading them. 1773 01:34:16,489 --> 01:34:19,793 They're selling their dog shit CDOs, then they go to another bank 1774 01:34:19,859 --> 01:34:21,928 and short the shit they just ****ing sold! 1775 01:34:22,950 --> 01:34:23,663 Let's go to the press, man! 1776 01:34:23,763 --> 01:34:27,330 This is a massive story. Who wouldn't publish it? 1777 01:34:28,100 --> 01:34:29,335 Robert Redford! 1778 01:34:29,769 --> 01:34:31,204 No, you don't understand! 1779 01:34:31,304 --> 01:34:33,373 I got it, guys. I got it. 1780 01:34:34,607 --> 01:34:36,176 What am I supposed to do? 1781 01:34:36,276 --> 01:34:37,944 Do you want me to write a piece called "We're All ****ed"? 1782 01:34:38,440 --> 01:34:39,946 Yes! That's a perfect title! 1783 01:34:40,130 --> 01:34:44,184 Casey, right now every bank in town is unloading these shit bonds 1784 01:34:44,351 --> 01:34:46,520 onto unsuspecting customers. 1785 01:34:46,152 --> 01:34:49,155 And they won't devalue them until they get them off their books. 1786 01:34:49,222 --> 01:34:51,691 This level of criminality is unprecedented, 1787 01:34:51,791 --> 01:34:54,270 even on ****ing Wall Street. 1788 01:34:55,161 --> 01:34:57,997 Jamie... And this is me being honest here, okay? 1789 01:34:58,298 --> 01:35:00,834 It took me years to build my relationships on Wall Street. 1790 01:35:00,900 --> 01:35:05,710 No bank or ratings agency is going to confirm a story like this 1791 01:35:05,171 --> 01:35:07,674 just because it comes from two guys in a... 1792 01:35:07,807 --> 01:35:11,440 Sorry, garage band hedge fund that thinks it's the apocalypse. 1793 01:35:12,712 --> 01:35:13,713 Wow. 1794 01:35:13,880 --> 01:35:16,549 I thought you were for real, Casey. You know, I'll have to say I really did. 1795 01:35:16,816 --> 01:35:17,817 Really? 1796 01:35:18,510 --> 01:35:20,153 Yeah, Jamie, you try being for real with a three-year-old 1797 01:35:20,220 --> 01:35:22,550 and a wife getting her master's degree. 1798 01:35:22,322 --> 01:35:25,658 I'm not gonna burn my reputation on your wild hunch. 1799 01:35:26,493 --> 01:35:27,660 Wow. 1800 01:35:27,827 --> 01:35:28,995 Wow. 1801 01:35:29,162 --> 01:35:30,196 Thanks for coming, guys. 1802 01:35:30,263 --> 01:35:31,431 Totally ****ing awesome to see you. 1803 01:35:31,531 --> 01:35:35,668 Yeah, Casey. I've always hated you, because you were a prick in college 1804 01:35:35,735 --> 01:35:38,710 and you are a prick today! 1805 01:35:38,538 --> 01:35:41,410 Thanks, Charlie. Still living with your mom? 1806 01:35:41,574 --> 01:35:43,430 Charlie, come on! 1807 01:35:43,109 --> 01:35:45,450 Mark Baum again. Call me. 1808 01:35:45,612 --> 01:35:47,247 Subprime bonds fell off a cliff. 1809 01:35:47,347 --> 01:35:49,282 Rumor has it the default numbers are huge. 1810 01:35:49,382 --> 01:35:52,185 Who got the remittance data early? I bet it's Goldman. 1811 01:35:52,252 --> 01:35:53,586 Yeah, **** you very much. 1812 01:35:53,687 --> 01:35:56,523 Jared, it's chaos down here. Where are we? 1813 01:35:56,923 --> 01:36:00,126 "And Caesar wept, for there were no more worlds to conquer." 1814 01:36:01,728 --> 01:36:02,962 Shane? 1815 01:36:03,363 --> 01:36:04,597 Shane? 1816 01:36:06,199 --> 01:36:08,902 Well, nobody's buying CDO or mortgage bonds anymore 1817 01:36:08,968 --> 01:36:10,270 and everybody wants swaps. 1818 01:36:10,603 --> 01:36:12,939 Swaps are now the most popular product on the street. 1819 01:36:13,390 --> 01:36:14,874 - That's good for us. - Yes and no. 1820 01:36:14,941 --> 01:36:16,376 I heard from somebody who heard from somebody... 1821 01:36:16,443 --> 01:36:19,145 No, Alex, no. Sorry. 1822 01:36:22,315 --> 01:36:24,150 Bennie Cleager over at Morgan is taking on 1823 01:36:24,250 --> 01:36:25,852 some heavy losses in the bond department. 1824 01:36:27,153 --> 01:36:28,822 Your ship might be taking on water. 1825 01:36:29,389 --> 01:36:31,725 It might be time to get our lifejacket and get out. 1826 01:36:32,459 --> 01:36:33,960 I'm jacked. 1827 01:36:34,494 --> 01:36:36,996 I'm jacked! I'm jacked to the ***s! 1828 01:36:37,630 --> 01:36:38,665 Good. 1829 01:36:38,765 --> 01:36:40,834 - Do you feel it? - No. 1830 01:36:47,700 --> 01:36:48,475 What'd you hear, Tommy? 1831 01:36:50,643 --> 01:36:51,644 It's happening. 1832 01:36:51,745 --> 01:36:53,580 Everybody wants our swaps. 1833 01:36:53,780 --> 01:36:55,782 Kathy's office is looking for you. 1834 01:36:56,116 --> 01:36:58,518 They're singing a different tune now, aren't they? 1835 01:36:59,853 --> 01:37:01,354 That's not good. 1836 01:37:06,192 --> 01:37:07,594 Maybe later. Not now. 1837 01:37:07,660 --> 01:37:10,300 This is a joke. Never. 1838 01:37:13,533 --> 01:37:14,634 Listening. 1839 01:37:15,350 --> 01:37:16,636 - Dr. Burry? - Yeah. 1840 01:37:16,703 --> 01:37:18,138 Deeb Winston, Goldman Sachs. 1841 01:37:18,204 --> 01:37:19,706 Listen, I've been reviewing your position. 1842 01:37:19,806 --> 01:37:22,750 I wanted to discuss your marks and make sure they're fair. 1843 01:37:22,142 --> 01:37:27,814 Yeah, I think you mean that you've secured a net short position yourselves. 1844 01:37:27,981 --> 01:37:30,717 So you're free to mark my swaps accurately for once 1845 01:37:30,884 --> 01:37:33,553 because it's now in your interest to do so. 1846 01:37:35,722 --> 01:37:37,824 I'm not sure what you want me to say. 1847 01:37:37,991 --> 01:37:39,492 I think that... 1848 01:37:40,994 --> 01:37:43,630 I think that you've already said it. 1849 01:37:50,904 --> 01:37:53,390 You tell Jeff at Goldman that I'm not transferring funds. 1850 01:37:53,139 --> 01:37:54,741 This is bullshit! 1851 01:38:01,915 --> 01:38:03,683 Okay, we'll talk later. 1852 01:38:04,184 --> 01:38:05,585 Thank you. 1853 01:38:08,880 --> 01:38:09,989 Thanks for coming so quickly, Mark. 1854 01:38:10,560 --> 01:38:11,391 Yeah. 1855 01:38:11,691 --> 01:38:12,926 I know you've been hearing rumblings 1856 01:38:13,260 --> 01:38:14,527 about some losses Morgan has suffered. 1857 01:38:14,594 --> 01:38:16,563 - Congratulations. - On what? 1858 01:38:18,932 --> 01:38:20,433 Thanks. 1859 01:38:20,533 --> 01:38:21,868 Having fun? 1860 01:38:22,902 --> 01:38:24,237 Yes. 1861 01:38:25,438 --> 01:38:26,773 Tons. 1862 01:38:27,273 --> 01:38:29,609 I just wanted you to know that... 1863 01:38:30,210 --> 01:38:31,878 That, yes, Morgan has suffered some losses, 1864 01:38:31,945 --> 01:38:35,749 but our liquidity is strong and there's no cause for concern. 1865 01:38:35,949 --> 01:38:38,785 Would Bennie Cleager be concerned? 1866 01:38:39,119 --> 01:38:40,453 Because word on the street 1867 01:38:40,553 --> 01:38:43,390 is that he took some pretty heavy losses. 1868 01:38:44,724 --> 01:38:46,526 Kathy, come on. We know each other. 1869 01:38:46,593 --> 01:38:48,795 What's going on? 1870 01:38:49,229 --> 01:38:50,730 How bad is this? 1871 01:38:50,897 --> 01:38:52,650 Okay. 1872 01:38:52,866 --> 01:38:55,902 Two years ago, Bennie Cleager in Morgan's bond department 1873 01:38:55,969 --> 01:38:59,539 also started shorting subprime housing, $2 billion in BBBs. 1874 01:38:59,606 --> 01:39:00,874 Bennie is smarter than I thought. 1875 01:39:00,940 --> 01:39:02,375 No, he's not smart at all. 1876 01:39:02,442 --> 01:39:04,811 The premiums on the swap ate into his desk's profit. 1877 01:39:04,911 --> 01:39:06,880 To cover his BBB shorts, 1878 01:39:06,946 --> 01:39:09,449 he sold a lot of A and AA swaps as protection. 1879 01:39:09,549 --> 01:39:10,550 A lot. 1880 01:39:11,251 --> 01:39:14,421 He believed that there was no way that they could be affected. 1881 01:39:14,988 --> 01:39:18,324 Tell me Morgan Stanley doesn't hold the contracts on these swaps. 1882 01:39:21,661 --> 01:39:23,163 Holy shit. 1883 01:39:23,830 --> 01:39:27,267 All this time I've been trying to figure out who I'm betting against, 1884 01:39:27,500 --> 01:39:29,335 and it's Morgan Stanley. 1885 01:39:30,303 --> 01:39:31,638 Which is me. 1886 01:39:33,340 --> 01:39:35,675 What's your exposure? $3 billion? 1887 01:39:36,609 --> 01:39:38,445 Please, don't tell me it's more than four. 1888 01:39:38,611 --> 01:39:40,246 I can't answer that. I can't answer that. 1889 01:39:40,313 --> 01:39:43,483 Yes, you can answer that, because I walk in here 1890 01:39:43,583 --> 01:39:46,653 and people are crying in your hallway. 1891 01:39:47,200 --> 01:39:48,188 Kathy, 1892 01:39:48,688 --> 01:39:50,757 you bring me in to tell me everything's fine, 1893 01:39:50,824 --> 01:39:52,250 and everything's not fine. 1894 01:39:52,692 --> 01:39:54,594 What, what is happening? 1895 01:39:56,796 --> 01:39:58,965 The long exposure is... 1896 01:40:00,867 --> 01:40:02,369 ...$15 billion. 1897 01:40:08,341 --> 01:40:09,476 Jesus! 1898 01:40:09,542 --> 01:40:11,945 He kept saying defaults over 8% were impossible. 1899 01:40:12,120 --> 01:40:13,130 Oh, my God. 1900 01:40:13,113 --> 01:40:14,647 That there would be a million homeless! 1901 01:40:15,782 --> 01:40:18,180 Yeah, but we have nothing to do with Morgan Stanley. 1902 01:40:20,954 --> 01:40:22,550 Yeah... 1903 01:40:22,389 --> 01:40:24,224 Tell the bankruptcy court. 1904 01:40:24,491 --> 01:40:27,627 Morgan fails, all our accounts go on their balance sheet. 1905 01:40:28,228 --> 01:40:29,863 It's just crazy. 1906 01:40:30,630 --> 01:40:31,398 Morgan makes the sucker's bet 1907 01:40:31,498 --> 01:40:33,833 and we pay their ****ing gambling debt? 1908 01:40:34,334 --> 01:40:36,836 Short the bank stocks. Then we wait. 1909 01:40:40,740 --> 01:40:42,742 Or we sell our swaps when the market opens. 1910 01:40:44,511 --> 01:40:47,547 We get our bonuses, our investors get their profits, we get... 1911 01:40:47,647 --> 01:40:50,150 What, 30 cents on the dollar? It's not bad. 1912 01:40:50,417 --> 01:40:51,918 We're three times that. 1913 01:40:52,180 --> 01:40:53,720 Not if there's no market left to sell them in. 1914 01:40:53,820 --> 01:40:55,722 Forget it. We're not giving out any lifeboats. 1915 01:40:55,822 --> 01:40:58,191 If Morgan goes under, we end up with nothing. 1916 01:40:58,258 --> 01:40:59,259 Vinnie. 1917 01:41:01,270 --> 01:41:04,197 Jesus, come on. I say when we sell. 1918 01:41:08,334 --> 01:41:13,730 Look, I get that this is personal for you, but we have a fiduciary responsibility. 1919 01:41:13,173 --> 01:41:14,674 No. No, we don't. 1920 01:41:14,941 --> 01:41:17,110 Nobody's acting responsible. 1921 01:41:17,277 --> 01:41:20,460 **** responsibility. Are you kidding me? 1922 01:41:20,547 --> 01:41:22,615 The ***holes at the big banks will take... 1923 01:41:22,716 --> 01:41:23,750 You boys want any appetizers? 1924 01:41:23,850 --> 01:41:25,585 We're talking, please! 1925 01:41:26,353 --> 01:41:27,854 - Excuse us. - Sorry. 1926 01:41:29,956 --> 01:41:32,759 We are going to wait, and we are going to wait, 1927 01:41:32,892 --> 01:41:34,394 and we are going to wait 1928 01:41:34,561 --> 01:41:38,298 until they feel the pain, until they start to bleed. 1929 01:41:38,631 --> 01:41:40,767 - That is what I want. - But what about our clients 1930 01:41:40,867 --> 01:41:42,135 who've entrusted us with their savings... 1931 01:41:42,235 --> 01:41:43,403 I say when we sell. 1932 01:41:43,470 --> 01:41:44,537 This isn't about you. 1933 01:41:44,604 --> 01:41:45,872 This isn't about you and your Upper East Side 1934 01:41:45,939 --> 01:41:46,973 - mahogany soapbox. - Hey! Hey! 1935 01:41:47,140 --> 01:41:48,475 I say when we sell! 1936 01:41:50,760 --> 01:41:51,811 Whatever you say, Mark. 1937 01:41:58,551 --> 01:42:00,320 Dude, did you hear the news? 1938 01:42:02,155 --> 01:42:04,491 Okay. So, not only do two mortgage hedge funds 1939 01:42:04,591 --> 01:42:06,393 backed by Bear Stearns go belly up, 1940 01:42:06,459 --> 01:42:09,596 but now there's a class-action lawsuit against Bear. 1941 01:42:09,662 --> 01:42:10,830 Holy shit! 1942 01:42:10,930 --> 01:42:13,433 Let's go! Push! Push! 1943 01:42:13,500 --> 01:42:14,934 So, what? Bear could really collapse here. 1944 01:42:15,100 --> 01:42:16,803 - This is a risk we really shouldn't take. - Then what? 1945 01:42:16,903 --> 01:42:18,905 We bought 80% of our swaps at Bear. 1946 01:42:18,972 --> 01:42:20,573 - We'd lose everything. - So what? 1947 01:42:20,640 --> 01:42:22,750 - Hey, sir? - One second! 1948 01:42:22,175 --> 01:42:23,176 That's my opinion. 1949 01:42:23,243 --> 01:42:25,679 We bought these ****ing things. We have no clue how to sell them. 1950 01:42:25,779 --> 01:42:27,213 I know. We have to get Ben to do it. 1951 01:42:27,280 --> 01:42:29,282 I've been trying to call him and he won't get back to me. 1952 01:42:29,349 --> 01:42:31,618 No. He's on vacation with his wife's family. 1953 01:42:31,685 --> 01:42:32,852 They're in England. 1954 01:42:33,820 --> 01:42:34,821 What? 1955 01:42:42,529 --> 01:42:44,130 - Hello, Ben. Hey. - Guys? 1956 01:42:44,197 --> 01:42:45,799 Yeah, we're here. Can you hear us? 1957 01:42:45,865 --> 01:42:47,367 - Guys? - Yeah, we got you. 1958 01:42:47,534 --> 01:42:50,370 Yeah. I hardly got cell phone or Wi-Fi service. 1959 01:42:51,504 --> 01:42:54,107 I'm trying to sell $200 million worth of securities. 1960 01:42:54,441 --> 01:42:56,776 In a pub. It smells like sheep. 1961 01:42:57,430 --> 01:42:58,440 You can do this. 1962 01:42:58,178 --> 01:42:59,312 I don't want to pressure you, Ben 1963 01:42:59,379 --> 01:43:01,981 but if you don't pull this off, we lose everything. 1964 01:43:02,215 --> 01:43:05,518 All right. Let's see what Credit Suisse's appetite is. 1965 01:43:10,690 --> 01:43:11,858 This is Brownfield Fund. 1966 01:43:11,958 --> 01:43:13,860 I want to unload my credit default swaps. 1967 01:43:14,194 --> 01:43:15,729 All right. What you got? 1968 01:43:15,895 --> 01:43:17,564 Twenty AA tranches of A.B.S. CDOs. 1969 01:43:18,198 --> 01:43:20,567 A.B.S.? Are these... These are pretty bad? 1970 01:43:20,734 --> 01:43:22,736 Absolutely. They're complete shit. 1971 01:43:23,360 --> 01:43:24,537 What's your notional value? 1972 01:43:24,637 --> 01:43:27,307 Face value is 205 million. Dollars. 1973 01:43:27,574 --> 01:43:30,176 All right, we could, we could go to forty. 1974 01:43:30,243 --> 01:43:31,578 No. We want at least 100 million. 1975 01:43:31,644 --> 01:43:35,315 100 million? Who are you, a drug dealer or a banker? 1976 01:43:35,415 --> 01:43:37,917 'Cause if you're a banker, you can **** right off! 1977 01:43:38,180 --> 01:43:39,185 I don't know if we can make a market. 1978 01:43:39,252 --> 01:43:40,420 Just give me your best price? 1979 01:43:40,487 --> 01:43:43,230 Yeah. Chuck 100 million in for me, mate. 1980 01:43:43,890 --> 01:43:44,357 I think we're far apart. 1981 01:43:44,858 --> 01:43:47,260 Look, if you don't want the deal, you can just hang up. 1982 01:43:49,729 --> 01:43:51,264 That's what I thought. 1983 01:43:52,650 --> 01:43:54,670 - 90 million. - 70. 1984 01:43:55,402 --> 01:43:56,903 85. 1985 01:43:57,103 --> 01:43:59,720 - 78. - 84. 1986 01:44:00,273 --> 01:44:02,275 - 78. - 84. 1987 01:44:04,110 --> 01:44:05,412 It's Dr. Burry. 1988 01:44:06,120 --> 01:44:08,848 Looks like the collapse of the financial sector is imminent. 1989 01:44:09,849 --> 01:44:11,785 Let's start to sell my position. 1990 01:44:12,185 --> 01:44:14,200 It's $1.3 billion. 1991 01:44:15,522 --> 01:44:17,357 Sure, I'll hold. 1992 01:44:41,147 --> 01:44:42,649 So, I was right. 1993 01:44:43,483 --> 01:44:45,985 I took a rash of shit for two years, but 1994 01:44:46,419 --> 01:44:48,321 I was right. 1995 01:44:48,655 --> 01:44:50,423 And everyone was wrong. 1996 01:44:51,324 --> 01:44:54,494 And, yeah, I got a bonus check for it. Sue me. 1997 01:44:55,161 --> 01:44:56,262 You know? 1998 01:44:56,663 --> 01:45:00,300 It's a lot of money. I get it. I can feel you judging me. 1999 01:45:00,400 --> 01:45:01,668 That's palpable. 2000 01:45:02,402 --> 01:45:06,406 But, hey, I never said I was the hero of this story. 2001 01:45:07,700 --> 01:45:09,576 Hey, Ben. How are we looking? 2002 01:45:10,777 --> 01:45:12,112 Eight... on... 2003 01:45:12,846 --> 01:45:14,180 Sorry? 2004 01:45:14,581 --> 01:45:16,683 No. Eighty million. 2005 01:45:16,916 --> 01:45:18,518 $80 million, $80 million, that's good, right? 2006 01:45:18,618 --> 01:45:19,686 - Eighty is great. - Is that good? 2007 01:45:19,786 --> 01:45:20,987 - Eighty is great, Ben. - Okay. 2008 01:45:21,210 --> 01:45:23,356 Thank you. Thank you so much. 2009 01:45:23,690 --> 01:45:25,592 Most of it went to UBS. 2010 01:45:25,692 --> 01:45:27,460 You're very lucky. The largest bank 2011 01:45:27,527 --> 01:45:30,597 in France froze customer's money market accounts today. 2012 01:45:30,663 --> 01:45:32,198 This thing's hitting Europe. 2013 01:45:32,298 --> 01:45:34,134 Greece and Iceland are finished. 2014 01:45:34,200 --> 01:45:35,535 Spain is teetering. 2015 01:45:35,635 --> 01:45:37,203 Are you serious? ****. 2016 01:45:37,637 --> 01:45:39,472 Ben, call us when you get home. 2017 01:45:39,539 --> 01:45:41,341 But, hey, before you go, 2018 01:45:41,441 --> 01:45:42,976 I'm just wondering... 2019 01:45:46,460 --> 01:45:48,114 Why did you do this with us? 2020 01:45:49,490 --> 01:45:51,510 You didn't have to. 2021 01:45:51,384 --> 01:45:55,550 Thank you. But, why? 2022 01:45:55,989 --> 01:45:58,892 You guys said you wanted to get rich. Now you're rich. 2023 01:45:59,459 --> 01:46:00,527 Goal! 2024 01:46:00,627 --> 01:46:02,295 Pamplona puts themselves on the scoreboard. 2025 01:46:06,399 --> 01:46:08,968 As the housing markets and banks continued to hemorrhage, 2026 01:46:09,350 --> 01:46:11,471 only one of the big shorts refused to sell. 2027 01:46:11,538 --> 01:46:12,739 Mark Baum. 2028 01:46:16,142 --> 01:46:18,178 So it was beyond perfect when he was asked to speak 2029 01:46:18,244 --> 01:46:20,800 at a conference opposite Bruce Miller, 2030 01:46:20,180 --> 01:46:22,649 the famous bullish investor. 2031 01:46:23,160 --> 01:46:25,218 After he and Mark had their debate, Alan Greenspan, 2032 01:46:25,318 --> 01:46:28,755 one of the architects of the whole crisis was scheduled to speak. 2033 01:46:29,220 --> 01:46:31,591 Everyone in Mark's office showed up, he even invited friends. 2034 01:46:33,930 --> 01:46:36,396 This was the Ali vs. Foreman of the financial world. 2035 01:46:36,763 --> 01:46:38,765 The realist versus the fools. 2036 01:46:39,232 --> 01:46:40,734 And if it seems almost too perfect, 2037 01:46:40,834 --> 01:46:42,836 trust me, this happened. 2038 01:46:47,273 --> 01:46:51,111 Welcome, everyone. Please give a generous welcome to 2039 01:46:51,444 --> 01:46:55,480 Mr. Bruce Miller and Mark Baum. 2040 01:47:12,232 --> 01:47:13,733 Strap yourself in. 2041 01:47:14,968 --> 01:47:17,137 So as some of you may know, Bear Stearns 2042 01:47:17,237 --> 01:47:19,806 has just received a loan from JP Morgan. 2043 01:47:19,906 --> 01:47:22,742 Of course, we're gonna have to wait and see how the markets react, 2044 01:47:22,809 --> 01:47:26,546 but that should lay to rest any concerns about the bank's health. 2045 01:47:26,613 --> 01:47:31,317 Now, I take it you have no plans to sell your $200 million in Bear stock? 2046 01:47:31,651 --> 01:47:33,286 No. As a matter of fact, when we're done here, 2047 01:47:33,386 --> 01:47:35,155 I'll probably go out and buy some more. 2048 01:47:36,656 --> 01:47:40,160 For the opposing view, Mr. Baum. 2049 01:47:42,595 --> 01:47:44,664 I got to stand for this. 2050 01:47:47,434 --> 01:47:49,200 Okay, hi. 2051 01:47:49,436 --> 01:47:51,838 My firm's thesis is pretty simple. 2052 01:47:52,172 --> 01:47:54,700 Wall Street took a good idea, 2053 01:47:54,107 --> 01:47:55,608 Lewis Ranieri's mortgage bond, 2054 01:47:55,842 --> 01:47:58,111 and turned it into an atomic bomb 2055 01:47:58,178 --> 01:48:00,347 of fraud and stupidity 2056 01:48:00,680 --> 01:48:03,350 that's on its way to decimating the world economy. 2057 01:48:03,450 --> 01:48:05,985 How do you really feel? 2058 01:48:06,119 --> 01:48:08,210 I'm glad you still have a sense of humor. 2059 01:48:08,121 --> 01:48:10,156 I wouldn't if I were you. 2060 01:48:10,523 --> 01:48:14,594 Now, anyone who knows me knows that 2061 01:48:14,661 --> 01:48:17,130 I have no problem telling someone they're wrong. 2062 01:48:17,197 --> 01:48:20,667 Bear Stearns is denying rumors of liquidity problems. 2063 01:48:21,368 --> 01:48:23,670 Holy ****, it's 39 now! 2064 01:48:25,839 --> 01:48:28,375 We live in an era of fraud in America. 2065 01:48:28,475 --> 01:48:30,844 Not just in banking, but in government, 2066 01:48:31,311 --> 01:48:34,280 education, religion, food, 2067 01:48:34,347 --> 01:48:36,160 even baseball. 2068 01:48:36,516 --> 01:48:39,119 What bothers me isn't that 2069 01:48:39,719 --> 01:48:43,556 fraud is not nice or that fraud is mean. 2070 01:48:43,857 --> 01:48:45,725 It's that for 15,000 years 2071 01:48:46,559 --> 01:48:48,128 fraud and short-sighted thinking 2072 01:48:48,194 --> 01:48:50,563 have never, ever worked. 2073 01:48:50,697 --> 01:48:53,233 - Jesus, Bear at 37... - Not once. 2074 01:48:53,666 --> 01:48:56,970 Eventually, people get caught, things go south. 2075 01:48:57,370 --> 01:48:58,405 It's ****ing plummeting, man. 2076 01:48:58,571 --> 01:49:00,874 When the hell did we forget all that? 2077 01:49:05,450 --> 01:49:07,547 I thought we were better than this. I really did. 2078 01:49:07,881 --> 01:49:09,916 And the fact that we're not 2079 01:49:10,500 --> 01:49:12,752 doesn't make me feel all right and superior. 2080 01:49:12,852 --> 01:49:15,355 It makes me feel... Sad. 2081 01:49:15,755 --> 01:49:18,910 Every time I ****ing hit "refresh" it's dropping, man. 2082 01:49:19,759 --> 01:49:21,428 And as fun as it is to watch 2083 01:49:21,728 --> 01:49:24,300 pompous, dumb Wall Streeters be wildly wrong, 2084 01:49:24,970 --> 01:49:26,399 and you are wrong, sir, 2085 01:49:27,233 --> 01:49:30,236 I just know, that at the end of the day 2086 01:49:30,904 --> 01:49:33,606 average people are going to be the ones 2087 01:49:33,740 --> 01:49:35,909 that are gonna have to pay for all this. 2088 01:49:36,576 --> 01:49:38,712 Because they always, always do. 2089 01:49:38,778 --> 01:49:39,779 It's 32. 2090 01:49:39,913 --> 01:49:41,281 It's ****ing tanked, man. 2091 01:49:41,414 --> 01:49:43,416 That's my two cents. Thank you. 2092 01:49:44,751 --> 01:49:46,860 Let me drop a deuce at Deutsche. 2093 01:49:46,252 --> 01:49:48,254 Does our bull have a response? 2094 01:49:49,255 --> 01:49:52,759 Only that, in the entire history of Wall Street, 2095 01:49:52,892 --> 01:49:57,263 no investment bank has ever failed unless caught in criminal activities. 2096 01:49:57,764 --> 01:50:01,267 So, yes, I stand by my Bear Stearns optimism. 2097 01:50:01,601 --> 01:50:03,603 Mr. Miller, I'm sorry. Quick question. 2098 01:50:04,104 --> 01:50:05,772 From the time you guys started talking, 2099 01:50:05,939 --> 01:50:08,808 Bear Stearns stock has fallen more than 38%. 2100 01:50:08,908 --> 01:50:10,276 Would you still buy more? 2101 01:50:10,477 --> 01:50:14,614 Yeah, sure, of course I'd buy more. Why not? 2102 01:50:15,810 --> 01:50:16,820 Boom. 2103 01:50:19,319 --> 01:50:20,653 Jesus Christ! 2104 01:50:22,122 --> 01:50:25,291 That concludes the first part of our presentation. 2105 01:50:26,292 --> 01:50:30,930 Up next, we have the legendary former chairman of the Fed, 2106 01:50:30,997 --> 01:50:32,799 Alan Greenspan. 2107 01:50:32,899 --> 01:50:34,234 Folks? 2108 01:50:52,519 --> 01:50:53,687 ...employees of Lehman Brothers today, 2109 01:50:53,820 --> 01:50:57,157 as the Wall Street giant's stock went to zero. 2110 01:50:57,490 --> 01:50:59,359 The collapse of the venerable New York bank 2111 01:50:59,459 --> 01:51:03,129 follows a tumultuous few months of market volatility 2112 01:51:03,196 --> 01:51:05,832 and fear in the world economy. 2113 01:51:06,166 --> 01:51:07,867 I got to see inside. 2114 01:51:08,668 --> 01:51:10,300 How? 2115 01:51:10,704 --> 01:51:11,705 Come on. 2116 01:51:12,539 --> 01:51:15,642 I left my phone in the office. I threw my pass out already. 2117 01:51:15,709 --> 01:51:17,143 Do you mind if I take your pass? 2118 01:51:17,210 --> 01:51:19,813 I don't give a shit anymore. You can do what you want. 2119 01:51:27,687 --> 01:51:29,389 Go directly to your transportation. 2120 01:51:29,489 --> 01:51:31,191 Do not talk to the press. 2121 01:51:31,358 --> 01:51:34,694 After 18 years, I just leave? That's just ****ing great! 2122 01:51:34,894 --> 01:51:37,797 I'll talk to whoever the hell I want! 2123 01:51:37,864 --> 01:51:40,200 Do not talk to the press. 2124 01:51:40,533 --> 01:51:42,502 Go directly to your transportation. 2125 01:51:42,569 --> 01:51:43,670 Do not talk to... 2126 01:51:45,338 --> 01:51:46,940 Yeah, or other people. 2127 01:51:47,700 --> 01:51:48,808 - That sounds nice. I would like that. - Yeah. 2128 01:51:48,842 --> 01:51:50,143 Finally. 2129 01:51:50,510 --> 01:51:51,845 Mark, hey. 2130 01:51:52,145 --> 01:51:53,446 It's a bloodbath up here. 2131 01:51:53,513 --> 01:51:55,150 Morgan stock has lost half its value. 2132 01:51:55,115 --> 01:51:57,417 It's down to 23. 10. It's in freefall. 2133 01:51:57,484 --> 01:52:00,487 Clients want to talk to you about pulling their money. 2134 01:52:00,687 --> 01:52:04,190 It's now or never, Mark. We got to sell. 2135 01:52:07,494 --> 01:52:08,661 Mark. 2136 01:52:10,300 --> 01:52:11,197 Mark, you hear me? 2137 01:52:11,531 --> 01:52:12,999 Mailbox one. 2138 01:52:13,166 --> 01:52:15,869 You have 15 messages. 2139 01:52:17,337 --> 01:52:18,972 Mike, I can't seem to get ahold of you. 2140 01:52:19,390 --> 01:52:21,508 Will you please call me at your earliest convenience. 2141 01:52:22,842 --> 01:52:25,679 It's Jack. You're buying stocks? 2142 01:52:25,879 --> 01:52:28,848 The market's at an all-time low. This is crazy! 2143 01:52:29,115 --> 01:52:31,451 I met my wife on Match.com. 2144 01:52:31,851 --> 01:52:33,186 My profile said, 2145 01:52:33,386 --> 01:52:35,722 "I am a medical student with only one eye, 2146 01:52:35,822 --> 01:52:37,724 "an awkward social manner, 2147 01:52:37,824 --> 01:52:41,394 "and $145,000 in student loans." 2148 01:52:42,620 --> 01:52:43,530 She wrote back, 2149 01:52:43,830 --> 01:52:45,465 "You're just what I've been looking for." 2150 01:52:46,366 --> 01:52:48,340 She meant honest. 2151 01:52:48,234 --> 01:52:49,903 So let me be honest. 2152 01:52:50,700 --> 01:52:54,341 The housing crisis represents the greatest financial opportunity of... 2153 01:52:54,407 --> 01:52:57,210 Making money is not like I thought it would be. 2154 01:52:57,544 --> 01:53:02,148 This business kills the part of life that is essential. 2155 01:53:02,215 --> 01:53:05,251 The part that has nothing to do with business. 2156 01:53:07,554 --> 01:53:09,689 For the past two years, my insides 2157 01:53:10,724 --> 01:53:13,930 have felt like they're eating themselves. 2158 01:53:13,259 --> 01:53:15,562 All the people I respected 2159 01:53:16,620 --> 01:53:18,565 won't talk to me anymore 2160 01:53:18,832 --> 01:53:20,667 except through lawyers. 2161 01:53:24,404 --> 01:53:25,772 People 2162 01:53:26,573 --> 01:53:29,175 want an authority to tell them how to value things... 2163 01:53:29,242 --> 01:53:34,714 ...but they choose this authority not based on facts or results. 2164 01:53:36,182 --> 01:53:40,854 They choose it because it seems authoritative and familiar. 2165 01:53:40,920 --> 01:53:43,390 And I am not 2166 01:53:43,456 --> 01:53:46,526 and never have been "familiar". 2167 01:53:48,461 --> 01:53:49,462 So... 2168 01:53:50,363 --> 01:53:53,466 So, I've come to the sullen realization 2169 01:53:53,566 --> 01:53:56,369 that I must close down the fund. 2170 01:53:56,436 --> 01:53:59,539 Sincerely, Michael J. Burry, M.D. 2171 01:54:59,265 --> 01:55:01,334 This isn't how I pictured it. 2172 01:55:03,336 --> 01:55:04,504 What did you think we'd find? 2173 01:55:04,604 --> 01:55:05,638 I don't know. 2174 01:55:07,507 --> 01:55:09,900 Grownups. 2175 01:55:12,946 --> 01:55:14,447 Mark, you there? 2176 01:55:17,117 --> 01:55:18,351 Mark? 2177 01:55:18,618 --> 01:55:21,521 Paulson and Bernanke just left the White House. 2178 01:55:26,860 --> 01:55:29,290 There's going to be a bailout. 2179 01:55:30,630 --> 01:55:34,340 Well, they had to. Right? 2180 01:55:34,367 --> 01:55:35,535 Paper markets would've collapsed. 2181 01:55:35,635 --> 01:55:36,803 They knew. 2182 01:55:37,370 --> 01:55:38,538 Cash would've stopped coming out of ATMs. 2183 01:55:38,638 --> 01:55:40,173 They had to backstop this. 2184 01:55:40,473 --> 01:55:42,809 They knew the taxpayers would bail them out. 2185 01:55:42,876 --> 01:55:45,311 They weren't being stupid. They just didn't care. 2186 01:55:45,478 --> 01:55:47,647 Yeah. 'Cause they're ****ing crooks. 2187 01:55:49,549 --> 01:55:52,850 But at least we're going to see some of them go to jail. 2188 01:55:53,319 --> 01:55:56,556 Right? I mean, they're gonna have to break up the banks. 2189 01:55:57,657 --> 01:55:58,992 I mean, the party's over. 2190 01:55:59,590 --> 01:56:01,728 I don't know. I don't know, Vinnie. 2191 01:56:04,497 --> 01:56:05,999 I have a feeling 2192 01:56:06,660 --> 01:56:07,934 that in a few years people are gonna be doing 2193 01:56:08,340 --> 01:56:11,370 what they always do when the economy tanks. 2194 01:56:11,504 --> 01:56:14,708 They will be blaming immigrants and poor people. 2195 01:56:15,800 --> 01:56:16,343 But Mark was wrong. 2196 01:56:17,444 --> 01:56:19,412 In the years that followed, hundreds of bankers 2197 01:56:19,512 --> 01:56:22,115 and rating agencies executives went to jail. 2198 01:56:22,282 --> 01:56:24,351 The SEC was completely overhauled. 2199 01:56:24,517 --> 01:56:27,220 And Congress had no choice but to break up the big banks 2200 01:56:27,620 --> 01:56:30,900 and regulate the mortgage and derivatives industries. 2201 01:56:34,894 --> 01:56:36,229 Just kidding. 2202 01:56:36,463 --> 01:56:38,698 The banks took the money the American people gave them 2203 01:56:38,765 --> 01:56:41,670 and used it to pay themselves huge bonuses 2204 01:56:41,134 --> 01:56:43,403 and lobby Congress to kill big reform. 2205 01:56:43,570 --> 01:56:45,805 And then they blamed immigrants and poor people. 2206 01:56:45,905 --> 01:56:48,740 And this time, even teachers. 2207 01:56:49,442 --> 01:56:52,479 And when all was said and done, only one single banker went to jail. 2208 01:56:53,413 --> 01:56:54,547 This poor schmuck. 2209 01:56:54,614 --> 01:56:57,830 Kareem Serageldin from Credit Suisse. 2210 01:56:57,417 --> 01:56:59,753 He hid a few billion in mortgage bond losses, 2211 01:56:59,819 --> 01:57:03,890 something most of the big banks did on a good day during the crisis. 2212 01:57:04,724 --> 01:57:06,726 Mark, can we sell now? 2213 01:57:08,395 --> 01:57:10,997 The fund will make almost $1 billion. 2214 01:57:11,970 --> 01:57:12,732 You'll clear $200 mil, Mark. 2215 01:57:13,900 --> 01:57:16,136 You know, once we sell, 2216 01:57:16,903 --> 01:57:18,772 we'll be just like the rest of them. 2217 01:57:18,838 --> 01:57:19,973 You know that. 2218 01:57:20,306 --> 01:57:21,908 No, we're not. We're not the bad guys here. 2219 01:57:21,975 --> 01:57:25,478 We didn't defraud the American people and prey on their dreams 2220 01:57:25,578 --> 01:57:27,147 of owning a home. All right? 2221 01:57:27,247 --> 01:57:28,515 They did. 2222 01:57:29,516 --> 01:57:31,818 And now we get to kick them in the teeth. 2223 01:57:36,923 --> 01:57:38,925 A billion dollars. 2224 01:57:40,593 --> 01:57:41,828 That's right. 2225 01:57:41,928 --> 01:57:44,764 But we got to close out our position or it could be zero. 2226 01:57:45,265 --> 01:57:48,101 I mean, it's now or never, Mark. 2227 01:57:57,277 --> 01:57:58,678 Okay. 2228 01:58:02,449 --> 01:58:03,850 Sell it all.