Anyone who follows the market probably saw all the headlines that David Einhorn is short Moody's (MCO). I have been short MCO since July 2007 and I think Einhorn has been short it a long time also. It is has been a very frustrating short. The Ira Sohn conference which he speaks at every year just occurred. His speech is floating around. Anyway, in it I give him the quote of the day.
"Both President Obama and Chairman Bernanke have said that the problem with AIG was that greedy people put a hedge fund on top of an insurance company. As I see it, AIG failed precisely because it was not a hedge fund, but a highly regulated, AAA rated insurance company. Call it the curse of the Triple A. The market incorrectly believed that regulators and rating agencies carefully monitored its risk profile and activities. As a result, AIG was able to abuse its access to unlimited cheap financing without its counterparties performing any additional credit analysis or demanding any collateral. Hedge funds can't abuse the system in the same way, particularly in the aftermath of Long Term Capital Management, as lenders pay much more attention to hedge fund counterparty risk and collateral requirements. Had AIG been a hedge fund as President Obama and Chairman Bernanke claim, none of this could have happened."
Absolutely correct. Those evil hedge funds are not blowing up the system. It is the "regulated", "carefully watched", financial system that our government is so wise to oversee.
In his speech, he makes a small comment about GE. I would bet alot of money he is short that also.
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