Video: Michael Burry of Scion Capital Speaks With 60 Minutes On CDS Bet

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Michael Burry on 60 Minutes
Michael Burry speaks! In the 60 Minutes episode tonight (Inside The Collapse, featuring author Michael Lewis) they featured Michael Burry who was first in on the credit default swap bet against deteriorating pools of sub-prime mortgages. The same trade hedge fund manager John Paulson put on thereafter and made billions.  Michael Lewis (author of Liars Poker) is coming out with a book called "The Big Short" featuring Burry's CDS move.  For more information read the Vanity Fair article. Lewis also talks about the roles of Goldman, AIG, S&P, Moody's, delusional incentive structures, moral hazard and incompetence, which combined, dropped a financial bomb on Wall Street and ultimately the Fed's balance sheet.

Lewis: "This is where it gets a little creepy. The people who were most instrumental in building the subprime mortgage machine also happened to be the ones who had the most detailed understanding now of the securities in the ruble and they're being paid all over again to sort through the mess because they are the experts. That is an age old trick on Wall Street just generally speaking, people who create disasters make a lot of money cleaning up the disaster because they're the ones who know about the disaster". This is like the eighties junk bond/S&L crisis cubed. Videos embedded below are courtesy of CBS 60 Minutes.

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I found an article from October 2007 when Burry unwound his CDS positions. Did you know that investors withdrew $4.3 billion of his derivative bets? Read this MarketWatch article: After shorting subprime, hedge fund is moving on. Burry's Scion Capital, quadrupling its money, has begun to unwind positions.

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