so it was in the fall of 2007, sitting on my desk and things are starting to get bad. wall street firms were losing lots of money. merrill lynch, city and i was covering some of the stuff and a lot of my colleagues in trying to figure out who is next to fall in who's going to have more problems and things really got much worse and i got a call from from a big hedge fund manager and that sort of overdue, we trade information. and he said greg, just play tennis with a guide. his name is john paulson and i barely knew his name at the time. and i just could not believe how much money he's making now while everyone else is losing money. ..

the winners in this crisis, john paulson and others, but be behind it all and propels a doll is a conundrum that this shouldn't have been john paulson, it shouldn't have been these investors that i write about this made the billions and figured it out in anticipated this collapse. the investors who should have been the ones i was writing about included people like george soros obviously who bet

against the pound's who at the time and the other investors the right amount, he should have demonstrated but didn't. warren but obviously, the greatest investor of our century or so. he could have done it and didn't. it might rain dose is an expert in march by securities and that is what john paulson three himself into learning about and analyzing and betting against. jim jeno's is the most famous short seller out there and this trade is a short sell, betting against things and jim didn't do this trade. hepburn who is someone i wrote about more recently made it $7 million last. he is known for his big trades, a big bets. he is okay with that, very volatile and didn't do this. he was told about this train and friends of m including some of

the people i write about said you should be doing is trading, he didn't and that kind of fascinates me and continues to do so and yet -- so what is this group of kind of big names on wall street and those that did it included john paulson as i mentioned and to tell you a little about john paulson, he spent a year -- i'm sorry, he spent a career on wall street and went to harvard business school and again did well starting off with an investment banker at bear stearns and then left to do his own investment in hedge funds. but what he robust on and specialize in was merger arbitrage and this is among the kinds of investing that you buy stock inquired and you bet against the company that's doing acquisition and you shake it up and sometimes he did but in his ninth goal of risk. you can do better than the next guy and that john paulson had a

good career and a good track record but he was a merger and never did more than 15 or 20% gains in a single year. yet he was the one who did his tray near his right knee and hand, the one key in this trade it is a gentleman named paolo pella greenie, he is a native of italy and also smart graduate of harvard business school. he played such a crucial role in the greatest financial coup in history. he spent a career kicking around wall street, an investment banker and i didn't do very well. he never got a promotion and that he always wanted, never really went very far. he did some trading on his own. he didn't do so well. he tried to trade in, he got

divorced and trade as some of his wife's money but didn't work out so well. [laughter] he had some great ideas. you don't want to do that much. he had great business ideas and was an innovative guy but didn't work out so well for him. again and, as sharp as they come. so he calls up the spring of 2005, he was out of a job at living in westchester north of new york city. a one-bedroom apartment. he had two children and from one marriage and he didn't want to have to go back two italy and leave them behind so he wanted a job and was approaching 50 which is tough on wall street. as a young person's business. the financial industry. he was aware if he called up john paulson as for a job and they overlap a little at bear stearns and paulson took his call. paulson said the only job i really have here paulo is an

analyst one and wants somebody to whom we went to business school. he said i would like that job. he ended up joining paulson and company baath and again unlikely to years later in the fall of 2007 he was on vacation with his third wife. [laughter] talk about the greatest trade ever. [laughter] he is on vacation with his new wife and i are in saint barts and is stopped to check the atm. she didn't just get the money, and he had told his wife too much about the trade there were working on. he's a little superstitious and didn't want to jinx it too much. he should have made awareness, but there aren't many details. so she is at the atm machine checks and says palo there is

$45 million in our account. at that time he had very little money in the bank account which was shocking, that was part of the $175 million that he made as a bonus for that trade for the year in 2007 so he goes from having nothing really in a one-bedroom apartment in 2005 to two years later as $175 million in the bank in saint parts having a good time. so i can he's an unlikely -- the other characters i track equally unlikely. there is a dr. turn investor. he's in northern california named to michael murray. he actually was early on his trade, before paulson and many others and has strong guy. it a little bit stubborn. he didn't always get along so well with his son investors feared allied didn't believe in him. he was doing well betting on stocks, and as we will talk

about nothing is really new in stocks in derivatives and mortgages and out of this -- not a lot of his investors believed in him and were skeptical. he persisted and gets a lot of credit. he was a kind and generous guy, but can be a little stubborn and again i likely. interesting guys to pull this off. in southern california and other gentleman i write about jeffrey green who was sort of this clich the hollywood type. he was a real-estate investor who made a lot and lost a doll. he had made it more after words and basically stole the idea from john paulson. and he ran with it and they were good friends. he did a lot of his own work and gets credit as well. again, he's not the kind of guy to pull off the greatest trading financial history. there's a young guy got andrew, is santa monica, california who

looks more like a server that investor. he's very passionate about his investment. really is passionate about legalizing marijuana. [laughter] so you can talk about both, he can go off on both of them the guy really wouldn't project and then there is a guy named greg lackey who is a trader at deutsche bank. the deal is as of right now want he basically is told by colleagues around him that housing is fine to hold up and he ignores them and he really risked his career to bet against housing and subprime mortgages and pull this trade offs. so in my view these guys are all sort of the climbing up a mountain and going to the top. paulson mesa to the top and a few others come close but not all do and some flyback down. why some continue and some didn't is a fascination of mine and that's why i wrote the book and i wrote about these guys and not the so-called experts. that sort of drives the book as

well as the dynamic writing about winners. and i thought you would be more enjoyable to write about and read about the individuals to figure this out and we can learn from these people as well i think as opposed to those who made the mistakes so that's another reason why i threw myself into this book and this project. i still find it kind of fascinating. the first thing i wanted to discuss is why the experts didn't see it. that kind of runs through my whole book because it's a fascinating time it into our financial system and nation. it is history because the very people that created in this toxic kind of a mortgage and toxic investment, all these kind of things that blue wap, -- the very people that got burnt the most by them and there is sort of this view now that those investment bankers were sort of

evil and how to get the investors. i don't think that's the case and the proof being that they hurt the most of the think about it. citigroup and merrill lynch and a lot of others major names, all the names in wall street are the very ones who greeted this stuff so it's like almost a butcher who has this poisonous me to, he knows it is poisonous or maybe should know it is poisonous, he brings it home and instead of selling in all services to the kids at home. it's been fascinating to me and why that's the case because again there is this sort of understanding that they knew they were doing and they foisted on investors and they really didn't. i know some of these people. there was a gentleman in new jersey in my community and he worked at lehman brothers and creed in some of the cbo staff so i talk to these people and i have gotten some informations as

it were to try to answer that question. and i've always been curious about it and some of them are more obvious than others i think. if you think about it's been an evolution. maybe they're always has been. there's an evolution in the creation of some of use investment products and first you and mortgages and then executive securities and unable to those with other products and create new cbo credit balt obligations and then you have more synthetic persons and credit defaults swaps and things you all and became much more complicated each year. everyone tried to outdo the next in terms of the rating products. to me if got to the point where the very people at investment banks you didn't understand them to where they should have. that was and i knew you had to tears, the senior people.

the senior people, robert rubin of the world and chat brands, sustanon o'neil, who ran merrill lynch, they helped to run citigroup, they were just to senior and they really didn't know what many of these products were for the rest and a deferred to the people below them. you can criticize them for that but they diverted to the people below them were the experts as well as the model then everyone was relying on. these models are based on historic data and a lot of that based on a housing never in our country ever fallen on a national level. it at least more than a small blip of a mother too. it a fact. so the models kind of got together were relatively safe and everything agency said it does save so it was a passing a balk and a little bit of a commonwealth, i can't understand so i'm going to defer to these experts. the experts were either rely on

models or they were focused on their competition. on wall street unfortunately we are at the point where everyone is worried about the next guy and everyone is worried about the next quarter and meeting the earnings so my friend in my town is not a bad guy, he just knew that he was in creating this cbo even if it was toxic, somebody else would be. i don't think he even thought they were so bad. they got caught up and it's fascinating, to visit these firms, the more each group they knew about their own area. they may be said in let's see what bad can happen but they didn't have a general larger view of how it could affect other groups and have the domino's could fall and the overall risk of the firm. there were some better than others. goldman saxton a better job of bringing down and seeing where the risk is throughout this. with that said, goldman sachs

with it cash in as well and i get a lot of credits. people either love them or hate them, but in the spring and fall or late summer 2006 josh who was the head at dbs trader at goldman sachs was at paulson and company. he was over there/john paulson after establishing this short against the toxic mortgages and toxic mortgage products. false and invited him over and he gets a lot of credits and gets a lesson that paulson invited groups of analysts' over to the firm to challenge their thesis. josh sat across from the experts at paulson. use the number one guy on the street and he knows paulson was in merger and was learning about this stuff.

he says when ever you are selling i am going to buy. the guys were taken aback and were unsure what he was trying to send, was he trying to help them because he traded and was trying to help them out or was he trying to break them out, may be sick of taking the other side of the position but they kept shorting and maybe he was holding too much in trying to tell them to stop. all they knew is the top guy in the business was warning them. and yet they kept with their trade. that says to me also gets credit but goldman sachs is late. two their credit they turn on a dive and realized in late 2006 how dangerous some of the mortgage products were on the books. they turned around and not only shed some of it but they started shorting it's an to me that's kind of a mark of a great investor selling get credit. but going back to my earlier theme, the experts really didn't see this coming and part of it is that they are too caught up

in their own world. when it comes to the experts who are investors, who should have seen this coming, the mortgage experts who dealt with this day in and day out for years, this is what they did and yet this merger died john paulson was the one you realize how talks area was. part of it is because it's all relative value on wall street. you don't make home runs too often so it goes to a bond world so it was all sort of went pool of mortgages looked better. maybe i will buy this one and shore this one, it was all relative value and normally this was a step back and that speaks to kind of a problem on wall street. if you think about it, the people that rise to the top at the firm's, the people that play by the rules of the people that i really good in institutions.

bernanke and hank paulson, moynihan geithner, people that did good in the firms but they don't usually have people sitting around thinking about the bad things. web bad can happen or take a step back. check prince is famous for saying we have to keep dancing until the music is over and that was the additive -- attitude on a washington. in hawaii with it i don't sell it and don't put on my books someone else will and i'm going to lose maybe a few cents per share etc. and that's the real problem on wall street were you don't have the people that think a little differently end part of the issue is the hedge fund world because it pays so well. it draws out towns but visitors fifth, the moynihan and the

bernanke, those kind of people employed by the role and this is harder. these people are very entrepreneurial and it's one reason why a enjoy writing about them. they think outside the box and there are no smarter and i think with the the people within the terms, is self selecting group, the people that take the risk in join a hedge fund or tried to run a hedge fund. they don't like running for the people and they speak about what bad can happen and often are a little more skeptical. i have found. unfortunately they get drawn out of these firms and what's left are really smart people that are worried about the quarter to often. goldman sachs does well and part is the reason of having a relationship that -- the more entrepreneurial people who want to store his fun no one there are started by goldman sachs as

so by definition against sell selected groups the auction and real ones to their credit keep in touch with a lot of these people so if you are a rich man it's easier to make a few calls and see what the real risks are out there as opposed to another firm and maybe that is some kind of lesson that other firms can learn by. the there is a sense i had that each of these firms became more leveraged and didn't realize the overall scope of the rest and instead kind of saw the sun sets in their own world and no one was able to take a setback. the other point is unfortunately that did you make so much money on wall street that there aren't many people with great experience institutional experience and not many people who work on wall street, the implosion of long-term capital management in 1998. in any other industry the people that do really well usually

stick around and don't make so much that they can retire but these guys retire after 10 or 15 years if you're really good. the really good ones often left starting hedge funds or to retire on some island. unfortunately the ones left were often younger and i haven't remembered in the early '90s how the market did have problems. remember in boston and california, was a national scale but clearly there was some history and some of the older people remember that. i cannot speak i was approaching 50 as was paolo, jeffrey green, the playboy investor in california who may never billion on the strain, he was approaching 50. so there something to be said about having that experience or at least having someone in the firm with that experience and too often some of the firm's i think on the streets don't have those kind of people with the experience. a lot of things move

incrementally in you have to have patience and that's not exactly a virtue that's rewarded at many firms on the street. again there is a lot of competition and if things change slowly, they really did and it took years. it's a mess that people weren't bearish on housing and were worried about housing. my brother and my he has written about some of those kind of issues and documented that there are all kinds of people who bet against housing in 2003, 2004 and they got burnt. some who could hold on end up doing well and making a lot of money, but it's hard to when we're in a world where is easier to compare and compare yourselves against others. your other managers are other investment firms and people used to being may be on a quarterly or yearly basis, not daily, they know what they're doing and

other product and loss every minute but they also know in a sense our competitors. i've talked to these guys all day long and people often criticize me and all the way journalists for negative stories about headlines in the industry. the stories come from people in the industry because they all appear with each other are doing in there the first was to khalaf and tal was blowing up and doing poorly. that's because their focus on each other, focused on their own returns and doing well for their investors but also their competitors and rivals. it's fascinating, their work is often determined by computer screens and that profit and loss for the day. you can't have done really well before the, you guys know these guys as well, or you could have a career of making so much money you didn't have to work. they really don't and i probably should be curing cancer but they are not.

[laughter] instead they are focused on this train, this. this quarter and this day and try to beat the next guy. half of them are former athletes were have that adrenaline and that makes them happy. there's an argument and another discussion for the free capital and allocation of capital that could be a good thing with too many of these guys focused on these kind of trained but we do need charm people allocating capital the way it should. these people are focused on themselves and their competitors and these firms were very focused on their competitors. that cost them in the end and is of the incremental changes and didn't take a step back and kind of see what could have happened, what it might be. the other fascinating thing i've found in my research for this book is one of the reasons why people didn't do this trade and i will explain in the second is a cost money. what i mean by that is basically

subprime and trained it is the one that john paulson and the other investors i look as on is basically -- i will take you to john paulson, here he was in 2005 any has eased worries about housing. he is not a housing guy and he sold the house or to but he's looking for protection on his overall portfolio. puts on the s&p 500 which would project downside against the stock market and they were expensive at the time so he was looking for some other way to hedge itself. paolo, his right-hand man, a native of italy, he had been at the firm for about half a year or so. he said that you might want to think about these credit defaults swaps and those sounded complicated but they are not am basically a derivative and a way to ensure yourself. it's an insurance contract on

anything, any kind of that basically ended in shore's debt so that the vault/debt and you've got the defaults insurance and you are protected. so he sent to paulson you should look of this credit to all swaps stop. to protect your downside just like any insurance contract in your downside is protected because you pay a certain amount of attention just like any insurance premium, paying annual fee and you are protected. so paulson said in he never knew much about this, the derivative instruments, and he learned about it. to me that is one of the most impressive things about those that did this training. they didn't think about it, many were approaching 50 and they have already done well and credit the fall swabs are complicated and i can be derivatives. warren buffett is worried about derivatives, weapons of mass

destruction one. i talked to them about why this. bill groce is the bond king in california and he said that derivatives are well-to-do. i could do with the my investors saw mommy to do so much of it and is true of what are wary of credit defaults swaps uranus derivatives investments and eventually helped lead to the downfall of aig so as a reason potentially to be wary of them. john paulson threw himself into learning about them and the ins and outs and paolo as well. the thing about credit defaults what is the cost money. they are like an insurance contracts and labor chief of 2005 they were dirty. and yet no one else was behind them very much. john paulson came from this other world, he has made worries about housing and paolo tells him about this and he says wait a second, my downside is 7% and my upside is hundreds of persons

a year, that's how the work of the train. why isn't everybody doing this training? i kept asking and unfortunately the reason is -- caring. it is sort of complicated but basically means you are paying out of the beginning of the year. everyone is focused on themselves and on their competitors and to pay out and buy this insurance i want to be behind i competitor. by more than half a percentage point it might even buy a lot of this credit defaults sought, but no one wanted to buy half a percentage point behind their competitor and it's a fascinating thing to me because being an outsider backing up the truck and buying as much as possible which john paulson did it help to being an outsider. but people on the inside did just day to day and worried about being up 7% for the year when the big competitor is up

seven 1/2%. there are not buying this. i understand the trained, and that was their justification. i debated the and you would rather risk -- it is actually worse to allow these people and actually worse being behind half percentage point or full percentage point that it is missing on the train of a lifetime if it means that everybody else is missing out and that's what happened. most people miss this chance of a guy that passed on the train still has a job at making a billion a year. i passed on the train by looking me i'm doing well. so unfortunately you are not rewarded for taking career rest as really what it is. the guy that takes the most risk in my book is the guy greg leamond because he was within a bank working at deutsche jenna

bank. people thought he was crazy and made fun of him. they called him a fool because he was worried about housing and he was buying these credit defaults swaps. people were working with him, the senior people in his bosses, they all said the you can do a little of that the check back with us a daily and we want to hear about this trade in don't take add to manage risk and he ended up doing some things just to make money to keep his bosses have visavie to keep the strain on but if it had worked the would have been known as the fool who bet against housing. don't you know that the fed can always cut rates. don't you know that you are taking a real career risk and he did it and stuck to his guns. if he hadn't done this trade even still be making a few million a. housing collapse, perfect storm, and there were too many

mistakes. the people that boy came up with this explanation perfect storm. so greg could have sent analysts are the worry. north he takes the biggest risks to me at anybody in this that i write about largely because he had more downside when it comes to this already making a good living. .. but i do think we're in

this period whereas an academic you would think markets should be becoming more efficient over time? not more inefficient. you've got more information out there. there are more people going -- playing -- investing i should say. and, yeah, slip of the tongue. and you would think things should become more efficient. you should have fewer bubbles, not more bubbles over time and yet and jerry has documented that. i think he counts maybe 26 or so financial bubbles in the past century. if you think the last few years you had obviously the housing bubble, energy prices, oil prices. they shot up to 140 a barrel down to 450, back to 70. asian markets,ation currencies

in 1997 or so. and the tech bubble obviously was a huge bubble. and it's my view that it's easier than ever for people to jump on trade. it used to be the case that if i'm a commodity expert i don't do anything about stocks. what do i do from stocks. if i'm a stock guy i don't have a commodities and nowadays there's ets and credit default swaps and there's derivative ways to express a trade. and to me it's leading to more of these bubbles. we're going to have more of them and people piling on the trade. it's troublesome. it's worrisome. and you wonder kind of where we are now. maybe china, and maybe brazil were up 100% last year. and people talking about canadian real estate is a bubble. i'm not saying it is. but we're at a point where there may be too many of these bubbles and it's costly.

and again, wall street is not as contrarian as we think and they jump on the bubbles because of what their competitors are doing. i've been writing a lot about the pigs trade. it's called the pigs trade now. actually i think we outlawed that at the wall street. i apologize. portugal, italy, ireland, greece and spain. so it's betting against those country and the debt of those countries and all kinds of investors are doing it. it's not your so have risen debt experts, your bond experts, people that are experts in kind of international affairs and things like that. people who never knew anything about these countries, i assume they can find it on the map, i suppose, so. they're piling on this trade. i'm not saying it's a bad thing. it's an interesting dynamic and you'll get more of these and it's hard to be a contrarian on the streets, harder than ever i would think. so again why was it investors that i write about and not paul johnson and michael berry, greg litman?

again, there's a myth out there that everybody drank the kool-aid and everybody believed in housing between my brother counts this data between 2000 and 2003 there were 1400 phrase of the phrase housing bubbles in articles in u.s. publications. and there were big stories in big newspapers and other places so it wasn't the case that my investors, the ones i write about were the only ones who were skeptical. there were a lot of people who were skeptical. so why was it they that came up? one of the reasons is they were -- some of them were a little late to the game. and that can help. so, you know, good fortune here is important as well. so there were investors who put on this trade who bought credit default swaps, this insurance on subprime mortgages than and they bought it in 2003, 2004, and nothing happened. and their bosses got upset. and they took the trade off or they took the trade off

themselves and their investors got upset and their clients weren't thrilled with it. they were losing money. and other people bet against home builders or tried to come up with another way to bet against housing.÷wt and there weren't a lot of great ways. there were -- if you bet against, let's say, a home builder, it didn't really work for a long time then even if you were convinced that eventually it would work, there was a lot of consolidation in that industry and maybe the one you bet against would actually end up doing pretty well and there was that danger and a lot of times it hurt people. so there were a lot of ways to get cautious about ways. you could move the mrs. s and the kids out of the house and rent. that's hard. you know, they got friends and, you know, a lot of stuff in the house. it's not easy to do. there weren't many ways to do it and those that were worried and figured these credit default swaps out, it took them a while to be really great trading mechanisms.

there's one thesis it took till 2005 and early 2006 for there to be a really great way to bet against housing, bet against subprime mortgages and it was these credit default swaps where they introduced synthetic ones where you can bet against kind of a pool. you didn't have to own the pool and basically just kind of buy some insurance and then there was this abx index which tracks subprime mortgages so that was all introduced kind of '05 and '06 and maybe it's nat coincidence that perhaps that's when things started imploding but it really wasn't easy to bet against housing. and it was better to be late than to be early on this trade. and that's what john paulson had and they got nervous in 2005 and 2006 is when things started flattening things out and in 2007 is when there was the implosion and it all kind of fell apart, the housing market. so it helped being -- being late

and having some good fortune there. and it also helped ignoring the experts. i mean, as i said john paulson to his credit invited all kinds of analysts, top guys into his firm to challenge their thesis and to their credit they stuck with the thesis and they held onto it and i give them more credit for that than i do for just kind of putting on the trade and being early holding on to your conviction and it's a remarkable temperament that allows yourself to do that. you have to be really self-confident and ignore everybody else and what happened was pellagrinni came up with a chart and things were kind of slowly growing and, boom, they shot up and they figured out, wow, and he came to paulson and said, boss, check this out and paulson sat back in his chair literally, wow, look at this data. it's right here. it's clear.

we should start betting against housing and that's when they held onto it. the irony they weren't the first people to come up with this data. robert schiller came up with this a year earlier but peligrini came up and they became convinced of it. it's pretty impressive because again it's hard when you have all the experts telling you one thing and your clients were nervous. i mean, there were a lot of investors, their own clients who didn't really believe in the trade. some did and some realized there was very little downside and there was huge upside but, hey, here's a stock guy merger guy, john paulson what's he buying all this subprime protection for. and that's why paulson was smart in that he had a lot of it in his own funds but he said, you know, if i'm really going to make a big huge bet here, i've got to really set up a new fund just dedicated to this trade. a one-trade fund and now a lot of people on wall street are doing that. bill acman did one for target and there's others.

but at the time there weren't that many people -- it was seen -- you're supposed to have classification. how do you have one trade in the funds and when he first started raising money, john paulson had real difficulty. he only raised $147 million at the get-go in early 2006 for this dedicated funds. he was rejected time after time. he went to harvard and they said we don't see it. we don't get it. there's other ways to express the trade. they didn't do this trade but they thought they had a better way to do it. he got rejected there. he got rejected in a lot of different places and experts all told him, you know, housing doesn't fall on a national basis. how are you going to get out of your trade? things like that. and paulson just stuck to his guns and that kind of conviction is pretty impressive. as is -- i'm really impressed how he held on to the trade. and -- i'm going to tell you in 2007, in february, 2007, they made 66% in the single month. now, just to give you some

context, they'd never really made more than a few percentage points in a single month and they made 66% in one month. they made more in one morning than george soros made betting against the british pound and he made a billion dollars betting against the british pound for his hedge fund and paulson was making billions. and peligrini had never been paid before. he said we should be taking some of this trade off. look at the data. don't forget the data. and it helped him. paulson was wealthy. he held on -- he stayed with his conviction. again, they're up 66% in a month and their own investors called up and they said, you mean 6.6%. it's a typo, right, guys? no, 66% and some of them said take the trade off and some encouraged them for. and some said move me to at a

fund which doesn't have as much exposure with what is trade was and paulson did and he didn't kind of break stride. he held on to this trade and again, that kind of conviction is kind of impressive and he gets all kind of credit for that. the other lesson here, the other kind of theme that i've learned from paulson and his trade and i've learned from sort of some other people that have done really well and that i've written about is the idea and buffett and soros have gotten into this. it's the idea of going to the juggler. and when you see an opportunity -- there's not that many. it's like in sports. many of my metaphors in the book is sports. it's very much like sports. in at bat they say you have one or two pitches to hit. some will be bad and some are pitches you can't really handle but you're going to get one or two and those are the ones you really got to pounce and hit out the ballpark. it's funny talking to these

investors they all kind of say, paulson, soros, buffett and tepper they say you will not have too many opportunities but when you got them you got to go for them because you don't have too many. that's where paulson get the credit. he saw this great opportunity and he jumped at it and he backed up the truck and he ignored everybody. the cliche be confident in yourself. they've got this remarkable ability and it's almost -- these guys, paulson and others, they've got an ability to turn on a dime and in 2007 the firm made $15 billion betting against housing and betting against intrienl mortgages. -- subprime mortgages. again, soros had made a billion dollars against the british pound in 1992 so he makes $15 billion in 2007 and then in 2008, he made another $5 billion transforming the trade and this is where he gets a lot of credit as well in my book. shifting the trade from one

against housing to one against financial firms 'cause he saw where the dominos will fall. he said hold on a second. subprime is melting down and who's holding this stuff they did the research look at maryland and citi, these firms, bear and lehman and they started buying credit default swaps not on the mortgages which they had been doing but on the firms themselves and they made another $5 billion doing that in 2008. but then in early 2009, he doesn't just take the trades off. he starts going long. he starts buying the very banks that he had bet against. and it's really -- it's a remarkable -- i would say impressive. it is impressive as an investor and i see it all the time with the best investors. they got this impersonal kind of way of looking at their portfolio. they don't fall in love with their investments which is what the average investor often does. someone told me that you don't want to be married to these kinds of people. they can really -- they can kind of separate and not get tied up

emotionally it's not say john paulson is not somebody you want to be married to. he's a good father and good husband. i'm told. but you don't fall in love with the portfolio. and it doesn't necessarily make for someone you nem want to be a friend with but it's a great investing trait nod to be so emotionally involved and invested in your portfolio. so going for the jugular and not falling in love with your investment. those are some of the themes that i kind of picked up from these investors and have been impressive to me. i was going to segue a little bit to why -- what these kind of investors are doing now. the biggest trade that i've been following -- there have been two, one is the gold trade. so john paulson in late 2008 as things were melting down and we were throwing money at all the problems out there as the government, he started taking a

look at gold because he's worried about the money supply leading to inflation and gold is a great way to hedge. historically it's been a great way to hedge inflation. there have been other top investors who have been buying gold as well. it's a fascinating investment because it's very different from the housing bet 'cause there's a much more downside. i mean, we don't really know what's gold worth? it's 1100 today. is that cheap or expensive? i don't know. you can't dcf it as you guys learned to. dividend model. it doesn't pay a dividend and what's gold worth? david einhorn one of the top investors he's got a vault in queens somewhere filled with gold and he doesn't own it because his wife cheryl is a big fan of gold or anything. he likes gold because he thinks the next guy is going to like it even more so that sounds like a greater fool kind of trade and yet historically for thousands of years gold has held up and has been an alternative to paper currency, so, yeah, i get it. if you're basing your currency gold is not a place to be. i find it fascinating investment

it could be double in price and cut in half and some of the very investors who bet against housing have shifted to do that including john paulson. others are betting against these countries like greece and some of the others and they've done really well with it. and it's an interesting trade. it's not clear how you're going to make money on the other side if things really implode. who's on the other side. it's a little bit like the cds trade. you have to worry about who's on the other side of these trade. what a lot of these people are betting on is either the euro implodes and collapses or just that yields on a lot of these bonds, the debt, the rate that a lot of the countries are paying is just going to have to go higher and continue to go higher as people just kind of worry about these debts. and the real home run trade is japan. some of the investors are betting against interest rates in japan which have been low forever. they are about 1.3% ten-year japanese bonds.

they haven't been above 2% in years and yet that's why it's really cheap to bet against. to buy credit default swaps or do other kinds of foreign currencies moves that are in effect a bet that if the rates go a little bit higher, then japan is going to have trouble paying its debt and they will to have restructure. it doesn't have to go much higher before the interest costs get really high and then you have real trouble so a lot of people are betting against japan and we'll see how that does. so those are the kind of big kind of trades i'm working on right now. and i invite any and all questions about anything i've written about, the book, "the greatest trade ever" or anything else that i'm writing about right now. [applause] >> greg, i think i get the privilege of the first question. >> okay. >> we only have time for one? i find it interesting that both the greatest trade ever and the second greatest trade ever soros

selling were shorts. do you think that there are more great trades among shorts than longs? >> that's interesting. they tend to be more asymmetrical and that's what these guys look for. so the crowd generally does well, the herd as it were, betting on things to go higher and things have generally gone higher. and things approved over time so it's the outlier kind of trade is often the short trade. it's not always the winning one, but, yeah, it often is. [applause] >> gregory zuckerman is a senior writer at the "wall street journal" and writes the papers "heard on the street" column. >> we're here at this year's conservative political action conference talking to radio host jerry doyle. tell us about your new book. >> the title of the book is from like two standpoint "have you seen my country lately?

" and the other is have you seen it, 'cause if you've seen it a lot of people would like to go back there. when i was writing it was hard to keep up as fast as it was changing and we hear about hope and change but i think at a certain point, whoa, slow down. the book and i think a lot of what talk radio is and a lot of what we're doing here we're like the speed bumps to just get government to just slow down. i don't care if it's republicans or democrats. it's like slow down. and let us know what you're doing and why you're doing it. and figure out what the unintended consequences of what you're doing might be. >> did you write it for your radio audience or is there a different audience you're trying to reach with the book? >> november. -- no. the radio audience is the book and the book is radio. it's really just -- a lot of what we have you and i do, we're in the business of information and we have the luxury of spending our day reading and go through the trivia and the tidbits.

most people don't. they're stuck on the freeway. their commuting. they're packing their kids' lunches. so we have all of this information and compress it into a book or a three-hour radio show or what you guys do on c-span. and our job is to just give it to them. and here's what i saw today, what do you think? not how to think, but what do you think? and when i was writing the book, it was kind of like this catharsis of like, wow, you look at this mosh pit of political insanity and where's the middle? how do you get my hands on it and it's for people to take a look what we do every day and maybe in 240 pages or whatever it is just get an idea of what's going. >> and you're an actor as well. how did you get from acting to political influence in a radio show? >> i had a tv show battle on 5 and the guy who syndicates my show is a huge science fiction

fan and he contacted me through another radio host about trying to put my series back on the air. and then he was talking to me about talk radio what do you think? i love talk radio. i listen to it all the time. and he said have you ever thought about doing it and i said no and through a process of about three or four months we started talking about talk radio and he gave me a fill-in slot on a saturday night for one of his hosts and he goes three hours, you know, you get to talk to america and blah, blah and blah and i said okay i'm going to do this and i'm there two hours ahead of time. and obviously you're a new guy and 12:00 you're off and 12:06 you're on and three, two, one you're live and i did my first 12 minutes boom and i looked at my clock in me and i had two hours and 40 minutes and i said i ever wanted to say about anything and i started to panic. and he backed me off and he goes, okay, you just did like five days of radio. you might want to slow down,

expand on that stuff a little bit. i got done and i was like back in bed. i was in the fetal position. i was like the first puppy cold from the litter. oh, someone hold me. and i loved it. and it was -- like when i was an actor, you have to have a therapist so i used to talk to a stranger about my problems and pay them every hour. now i got paid every hour to talk to strangers about my problems. if you can be that voice for the audience, you know, if you can be the validation of what they want to say but they don't have the opportunity to say and i think people like my show because i'm an equal opportunity offender. it doesn't matter if it's republican or democrat. if you do something right, cool. if you do something wrong, we're going to talk about it. and people have a place to come by and just be like -- there's someone that's like watching out for me. there's someone who's got my 6. it's interesting to kind of

watch the media because it's very agendaized whether it's fox, msnbc and you know what they will talk about and what they say. on my program i try to give people an opportunity to have an exchange of ideas, front porch, stop by, lights on. if you can make it, that's great. and kind of give people a little bit of insight into not necessarily what's happening but why it's happening. and what the ramifications of that are going to be. >> well, the obstacles that you met when you first started in radio, was there anything similar when you first started writing the book? >> you know, with any publisher, simon and schuster, thankfully, they have their relationships and there are certain things that they don't want said. and in radio there's certain things they don't want said. and on tv there are certain things they don't want said so you have to find a way around it.

and you have to kind of just do it in a way that's not obvious. but they were very cool. they pretty much gave me the option to write whatever i wanted to write about. and, you know, it was -- i have a whole new respect for writers 'cause, you know, we have a lot of people come on the program with their books, oh, you wrote a book, that's cool. and then i wrote a book, wow, that's hard. because when you talk i can always the next day or the next hour just go, you know what i said last hour, i was way wrong. you know, i just got this information that changes whatever but when it's on the page, it's there for all time. so what i did was i have, i don't know, 3 or 400 end notes in the book and i chronicled where i took everything from. so you can't dispute my facts. you can dispute my conclusions but you can't dispute the facts because they are what they are. >> so do you want to write another one? >> not right now. no, no, really no. it's an interesting process.

i think in writing the book, i kind of then tweak my radio show based upon what i've done with my book because you slow it down because what was the book about. what was the show all about? and for me it's about just trying to, you know, push the rock up the hill a little bit more every day. you know, i'm not here to tear down or to prop up. i'm not a cheerleader, which, unfortunately, we see a lot of in books and in tv and in radio. and everybody like you just drop the football in the end zone. i think what we need more of in the media is coaches. you know, somebody going to smack you up against the head and say, that was not good. we just lost the game but a lot of what we have ideologically are cheerleaders, not challenging their own. and i think that's where the best exchange of ideas take place when people just go, really, you believe that? why? when i hear about these financial summits that they're

having with obama and his administration, i go, dude, let's have a meeting right now and i can tell you exactly what you need to do. stop spending. summit over. stop spending. but we're going to get isrsk and bowls and six democrats and the cameras will be on. look at all these learned minds getting together to solve the deficit problem. stop spending. simple. and people go, yeah, 'cause they've had to do it. you and i. we've had to deleverage. a lot of people got crazy in '06, '07, real estate, atm. i always wanted a quad, an rv a boat. and so what we've done in the last year is reduce our spending by about 28%. and people are going, i had to do it. why don't they? and i look at the government just now signing $1.1 trillion increase in the deficit to $14.3 trillion and then i hear everybody talking about we're doing this for our children and our children's children.

no, you're bankrupting the next generation. and i think we have a responsibility to make the campground a little bit nicer than the way we found it and what we're doing republican or democrat and everybody like oh, obama is doubling the national debt. hey, bush did the same thing from 5 to $10 trillion. i listen to these guys well, you know, obama -- i go, you did it. you did exactly the same thing. under the guise of compassionate conservatism. which to me is redundant. conservatism in my nature is compassionate. when you throw compassionate conservatism oh, we can spend a lot of money. the whole thing helping out religion and government and how do we advance that agenda. i don't want to protect government from religion. i want to protect religion from government. 'cause whoever writes the checks makes the agenda. and i think, you know, people right now are just like, you know, what? commonsense getting back to just commonsense. stuff that we have to do every

day and hopefully i capture some of that in the radio show and hopefully i got it in the book. >> thank you very much for your time. we appreciate it. >> thank you. >> howard bloom founder of the international paleopsychology project argues reinventing capitalism to meet the creative drive inherent in human beings can turn around economic problems. the strand bookstore in new york city hosts the hour and 10-minute event. [applause] >> basically i'm here to generate a lot of talk from howard. [laughter] >> what should be added, of course, is in howard, whom i've known how many years? >> roughly 8 to 10 years. >> 8 to 10 years, howard, you used to have chronic fatigue. i used to go to his house and other famous people did and sit around his bed because howard had been a scientist.