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By Root 379 0

made for the podium. Noting the presence of his mother in the third row, but ignoring his partners in the back, along with the crowd of twenty his partners had alerted (free tickets to Ali-Frasier!), Eisman launched a ruthlessly reasonable dissection of the U.S. financial system. "Why This Time Is Different" was the title of his speech--even though it still wasn't clear he was meant to be giving anything so formal as a speech. "We are going through the greatest deleveraging in the history of financial services and it's going to go on and on and on," he said. "There is no solution other than time. Time to take the pain..."

As Eisman had risen, Danny had sunk in his chair, instinctively. "There is always the possibility of embarrassment," Danny said. "But it's like watching a car crash. You can't not watch." All around him men hunched over their BlackBerrys. They wanted to hear what Eisman had to say, clearly, but the stock market was distracting them from the show. At 9:13, as Eisman was finding his place at the front of the room, Bear Stearns had announced that it had gotten a loan from J.P. Morgan. Nine minutes later, as Bill Miller explained why it was such a good idea to own stock in Bear Stearns, Alan Schwartz had issued a press release. "Bear Stearns has been the subject of a multitude of rumors concerning our liquidity," it began. Liquidity. When an executive said his bank had plenty of liquidity it always meant that it didn't.

At 9:41, or roughly the time Eisman made his bid for the podium, Danny sold some Bear Stearns shares that Eisman, oddly enough, had bought the night before, at $53 a share. They'd made a few bucks, but it was still mystifying that Eisman had bought them, over everyone else's objections. Every now and then, Eisman made some short-term trade of trivial size that totally contradicted everything they believed. Danny and Vinny both thought the problem in this case was Eisman's affinity for Bear Stearns. The most hated firm on Wall Street, famous mainly for its total indifference to the good opinion of its competitors, Eisman identified with the place! "He'd always say Bear Stearns could never be acquired by anyone because the culture of the firm could never be assimilated into anything else," said Vinny. "I think he saw some of himself in them." Eisman's wife, Valerie, had her own theory. "It's this weird antidote he has to his 'the world is going to blow up' theory," she said. "Every now and then he would show up at home with this totally bizarre long."

Whatever the psychological origins of Eisman's sudden urge, the previous afternoon, to buy a few shares in Bear Stearns, Danny was just glad to be done with the matter. Eisman was now explaining why the world was going to blow up, but his partners were only half-listening...because the financial world was blowing up. "The minute Steve starts to speak," said Vinny, "the stock starts to fall." As Eisman explained why no one in his right mind would own the very shares he had bought sixteen hours earlier, Danny dashed off text messages to his partners.

9:49. Oh my--Bear at 47

"If [the U.S. financial system] sounds like a circular Ponzi scheme it's because it is."

9:55. Bear is 43 last OMG

"The banks in the United States are only beginning to come to grips with their massive loan problems. For instance, I wouldn't own a single bank in the State of Florida because I think they might all be gone."

10:02. Bear 29 last!!!!

"The upper classes of this country raped this country. You fucked people. You built a castle to rip people off. Not once in all these years have I come across a person inside a big Wall Street firm who was having a crisis of conscience. Nobody ever said, 'This is wrong.' And no one ever gave a shit about what I had to say."

Actually, Eisman didn't speak those final sentences that morning; he merely thought them. And he didn't actually know what was happening in the stock market; the one time he couldn't check his BlackBerry was when he was speaking. But as he spoke a Wall Street investment bank was failing, for a reason