David Einhorn on "Too Big to Bail" and Corn, Oil Bubble Forming Due to Easy Money Policies, Also Long and Short Ideas (Greenlight Capital)

David Einhorn of $7 billion hedge fund Greenlight Capital, who gave reasons to short Lehman Brothers (12/07 VIC, 5/08 Ira Sohn speech6/08 CNBC) and Allied Capital (2002 Ira Sohn Conference speech) before they eventually collapsed, was on CNBC on 12/6/2010 (clips 1, 2, 3, 4), Reuters Insider on 12/8/2010 and Charlie Rose on 12/12/2010 giving views on the market. 

He believes "zero rates are a very dangerous long term policy" and "too big to fail" policies will eventually lead to something that is "too big to bail" (G-3 country or Spain), which could spark the next systemic crisis. He's bullish on gold as a currency alternative: "We're going to continue to own gold as long as we think the monetary and fiscal policies don't make sense" (clip 1 below).

Also, watch Einhorn tell Former Fed Governor Laurence Meyer that he's worried about a bubble forming in corn and oil due to easy money policies (clip 3 below). Fiscal and monetary headwinds aside, he still sees opportunities in stocks (clip 4). His fund is net long 70/30. Einhorn, do you think Shiller's S&P Cyclically Adjusted P/E (CAPE) ratio will hit bottom at 6 like it did in 1932 and 1982? It hit a low of 13 in March 2009 and is now back at 22. Also, how would a systemic sovereign debt crisis affect the pricing of risk assets? Open question..

Long positions mentioned: Sprint (S), Apple (AAPL), Gold, Pfizer (PFE), Vodafone (VOD), CareFusion (CFN), Interest Rates (see Reuters Insider Video)

Short positions mentioned: St. Joe (JOE) Moody's (MCO) and McGraw Hill (MHP)

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