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Big Short Reunion w/ Danny Moses: Rising Rates, AI & Private Equity | The Real Eisman Playbook Ep 80
Danny Moses argues that AI’s buildout is real but its financing, concentration and uncertain profitability deserve scrutiny.
The Real Eisman Playbook · Steve Eisman
- Danny Moses is a former Big Short partner and host of On The Tape.
The best minutes
- 16:50AI financing echoes the warehouse lines behind subprime4 min
- 22:38Private equity's fundraising model is colliding with exits6 min
Also worth watching
- 5:04Small Fed and Treasury moves cannot offset the debt backdrop3 min
- 8:30Equity wealth now poses more economic risk than housing2 min
- 11:05Real AI demand does not guarantee profitable infrastructure3 min
Skip the five-minute On The Tape setup, the eight-minute media transition and Big Short stories, and the sponsor reads.
Full analysis · 6 min read
Real Alpha · Nov 7
Danny Moses says CoreWeave may be vulnerable with $51 billion in debt
- Moses said he thought CoreWeave was vulnerable and cited $51 billion in debt, including leases.
- That flags financing exposure, not proof that CoreWeave cannot become profitable.
- Teams should test utilization, customer concentration, cash conversion, and who funds the buildout.
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6 sections, the 4 other voices it tests Moses against, and what it means for you. Every episode we cut gets one.
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Moses thinks CoreWeave is vulnerable with $51 billion in debt
Moses said he thought CoreWeave was vulnerable. He later cited $51 billion in debt, including leases.
Eisman said the figure first sounded small beside the industry's spending scale. But that reaction is a warning about scale blindness, not evidence of insolvency.
Moses said he had not done enough analysis to judge whether CoreWeave could become profitable. He described a possible balance-sheet mismatch as the company moved toward shorter-term rentals.
For example, Moses likened CoreWeave to WeWork in the AI trade and cited chip purchases and large clients. The relevant question is whether financing terms, equipment life, and customer commitments line up.
The episode gives no maturity schedule, interest cost, utilization rate, or free-cash-flow figure for CoreWeave. Without those measures, $51 billion signals an underwriting question, not an answer about repayment.
Our read
The figure warrants due diligence, but neither it nor Moses's qualified warning establishes failure.
Real AI demand does not guarantee infrastructure returns
Moses treated AI as a lasting technological shift, not a fake use case. His concern was whether the capacity being built can earn adequate returns.
He compared current spending with the fiber-optic buildout of 1999 and 2000. The internet was real, he said, but deployment and financing outran workable economics.
That analogy is a stress test, not a prediction that AI repeats the bust. Moses said chip supply can grow and prices can fall, changing which companies earn returns.
Moses said he had no idea whether OpenAI would make it and thought Anthropic was burning cash heavily. He wanted profit math for enterprise and consumer demand, while saying he would not pretend to know token economics.
Moses said he would not short the whole theme and liked Alphabet, Amazon, Meta, and Microsoft on pullbacks. That is his investment view, not proof their capex will pay off.
Earlier, Moses said Clear Street sponsors On The Tape and partners on events. The episode gives no link between that relationship and his AI analysis.
In October 2026, Gil Luria told Prof G Markets that debt and equity funding for AI infrastructure is finite. Luria's point was financing capacity, not absence of demand.
Still, investors need to ask whether revenue will cover each new generation of equipment.
Our read
The useful distinction is between demand for AI and returns on the infrastructure built to serve it. Moses offers a warning, not a full valuation of the sector.
Warehouse lines reveal where financing can fail
Moses compared the AI financing chain with the 2006 and 2007 mortgage pipeline. The point was how credit funded production before loans reached investors.
Take the exchange's simplified example. A loan at par was 100, with a 2.5 percent origination cost. Our calculation is 100 + 2.5 = 102.5, the break-even sale price. The speakers said it needed to sell above that for the economics to work.
When resale prices weakened, lenders could withdraw warehouse financing, leaving originators with loans they could not sell. The conversation puts lender pullback at the failure point, not securitization alone.
But Moses did not show that AI loans share subprime mortgages' underwriting, collateral, or resale structure. The analogy identifies a channel to test, not a forecast of defaults.
“The minute the thing started to drift lower, you and I both know what happened, Wall Street started to pull the warehouse lines.”
Our read
The risk Moses and Eisman describe is a funding reversal that can strand assets. Their comparison does not establish that today's AI financing has the same structure.
Customer concentration makes AI demand harder to underwrite
Eisman cited a 10-Q reporting that 70 percent of Nvidia's accounts receivable came from five accounts. Receivables concentration warns about collection exposure, but it is not the same as revenue concentration.
The host and guest left major AI customers' economics unresolved. Moses said enterprise and consumer demand still had to show buyers could pay for infrastructure.
Chamath Palihapitiya said on All-In in October 2026 that one percent of companies represented 90 percent of AI spending. His wording was, "And of that 90%, 80% of them are from unprofitable VC backed companies."
That phrasing leaves its referent unclear, so it should not be converted into an 80 percent share of total spending. The two concentration measures are not necessarily about the same buyers.
For an operator, the useful test is whether committed demand comes from businesses able to pay.
Our read
Nvidia's receivables and broader AI spending each point to concentration, but they are different measures. Neither alone establishes whether end customers can sustain the buildout.
Off-bank credit leaves part of AI exposure opaque
Moses said lending had shifted outside banks into private credit, including technology and AI businesses. He also said the amounts and locations of exposure were hard to track.
Eisman said $500 billion of AI issuance was taking place that year and crowding out Treasuries. That frames the issue as competition for capital, not just one company's balance sheet.
Moses cautioned that higher rates affect companies without growth differently. In October 2026, Steve Eisman said on The Real Eisman Playbook that four large banks showed no broad consumer-credit deterioration.
His October review pointed instead to private credit and AI debt as possible weak spots. That evidence narrows the diagnosis, but does not map every loan outside banks.
Ed Elson, on Prof G Markets in November 2026, pointed to Microsoft's $25 billion bond sale after earnings. He argued hyperscalers increasingly rely on capital markets to fund AI infrastructure.
One sale shows market access as well as reliance, but does not identify what share funded AI. Still, financing exposure reaches beyond neoclouds to the largest platforms.
Steve Eisman · The Real Eisman Playbook · Oct 16Bank credit data does not yet show a broad downturn
Ed Elson · Prof G Markets · Nov 2Big Tech now depends on capital markets to fund its AI buildout
Our read
The episode shows no broad bank-credit breakdown. Its concern is that funding risks may sit outside bank data and can reach even large technology firms.
Slow exits make private equity's smooth marks less informative
Eisman said monetization took three to four years as recently as five to seven years ago. It was seven now, he said, and maybe would reach 10.
Moses described managers' incentive to gather assets, deploy money, and earn management fees. Those incentives reward fundraising before cash comes back to investors.
Moses said the sector had not faced a true shutdown since COVID. He recalled the Fed and Treasury buying HYG during that episode.
That support makes COVID a poor stress test for credit discipline in a normal downturn. Eisman said private assets can seem less volatile because they are not priced daily.
Moses discussed fund gates, model-based marks, and pressure to raise another fund before older investments are realized. Together, slower exits and delayed marks can conceal cash pressure without proving asset impairment.
Moses also said a private deal appearing in a retail investor's inbox may reflect a need to fill it. That is his caution about distribution, not a finding about every offer.
Ed Elson said on Prof G Markets in October 2026 that AI risk was less priced in private markets. He contrasted those markets with public ones, where investors were more cautious.
That is a warning about pricing, not evidence that every private holding is mispriced.
Our read
Slow realizations and infrequent marks make reported stability a poor substitute for cash returned to investors. The episode raises a pricing concern, not a blanket verdict on private assets.
What it means for you
- Map the funding chain. List debt, leases, lender types, and refinancing dates across major AI commitments. The warehouse-line comparison makes counterparties and rollover terms operating risks.
- Test equipment utilization. Compare utilization and customer revenue with infrastructure costs and committed capacity. Track whether contracted demand covers financing as chips age.
- Stress buyer concentration. Separate receivables from revenue by customer, then test a delayed payment or lost account. Eisman cited five accounts behind 70 percent of Nvidia receivables.
- Audit exit cash. Compare cash distributions with reported marks, fund gates, and new fundraising. Slow realizations make appraised stability a poor substitute for returned cash.
What to watch
- Whether utilization and customer revenue keep pace with AI capacity and debt service.
- Whether lenders keep funding projects when resale prices, refinancing terms, or utilization weaken.
- Whether private-equity distributions catch up with fundraising and reported marks.
Send this to the CFO and infrastructure lead setting AI financing tests.
Watch the minute Moses names CoreWeave's debt figure.
Written by Real Alpha from the episode's transcript and the other moments it links, then checked against the transcript. Quotes are the speaker's exact words.
Minute by minute
- 0:24On The Tape expands into media
Moses says On The Tape features guests from several fields and has grown to include a Substack project with Porter Collins and Vincent Daniel, events with Clear Street and a Friday Night Dirty weekly wrap. He describes the podcast and writing as complementary parts of the offering.
- 4:54Rates and debt pressure housing
Moses says Treasury efforts to lower long-term yields are too small to move a market this large, and he sees rates staying higher amid inflation and heavy debt. He cites the Fed balance sheet at $6.7 trillion after reaching $9 trillion and U.S. debt above $40 trillion, up from $8 trillion; Eisman points to $500 billion of AI issuance and 7.5% mortgage rates. Moses says younger buyers think differently about homeownership and sees a K-shaped economy with weak activity below its wealthy end.
- 10:33AI spending echoes past capex booms
Moses says AI is a real secular shift but compares its capex to the 1999–2000 fiber-optic boom, where spending outran the economics. He says NVIDIA’s gross margins remain in the high 70s, but expects chip supply and competition, including China and open source, to pressure returns over time. He prefers Alphabet, Amazon, Meta and Microsoft on pullbacks because they can curb capex, questions whether OpenAI and Anthropic can become profitable, and sees CoreWeave’s $51 billion of debt, including leases, as a poor way to express the theme.
- 16:50AI financing echoes mortgage warehousing
Moses sees a parallel between AI financing and the subprime warehouse-line model: lenders financed mortgage originators, which sold loans into securitizations, and funding stopped when loan values fell. He says AI-related securitization deals and lending outside banks, including private credit to technology firms, make leverage harder to track, though he is not calling the situation systemic.
- 20:19AI growth depends on concentrated buyers
Eisman says NVIDIA’s 10-Q showed that five accounts made up 70% of its accounts receivable, despite revenue being up 110%. Moses says AI contributes at least half of GDP growth and that the economy has little room to slow the buildout. He also says the technology’s potential cybersecurity risks unsettle him, though he cannot predict the consequences.
- 22:38Private equity faces slower exits
Moses calls private equity an attractive permanent-capital model but says fundraising pressures firms to put money to work, raising concerns about underwriting and covenant-light loans. Eisman says monetization timelines have stretched from three to four years to seven, perhaps 10. Moses says some funds cap redemptions at 5% and argues that retail investors may receive deals institutions pass on.
- 28:10Eisman frames his show as education
Eisman says he started the show in April of the previous year with Dan Clifton, two days after President Trump announced tariffs; their first interview drew 5,000 views. He later added a weekly wrap and says his goal is to educate viewers without trying to prove others wrong.
- 32:50Moses recalls the Big Short trade
Moses recounts Eisman holding up a zero to challenge a speaker’s claim that losses would stop at 5%. They describe their subprime credit-default-swap position as an opportunity trade: it started small, and they say being wrong for a year would have cost about 5%. Because the contracts were over the counter, they waited for marks rather than watching prices on a screen.
- 36:12Deficits could demand higher yields
Eisman says the U.S. has no serious alternative to Treasuries, which underpin the global financial system. Moses counters that the dollar’s share of reserve currency has fallen from 71% to 57%, while gold represents 27% of central-bank holdings and Treasuries 22%; he expects quantitative easing to return. Both say neither political party has an appetite for spending cuts, and Eisman agrees that investors may require higher yields.
Published Oct 19, 2026.
Transcript · 35 min read
The Real Eisman Playbook, hosted by Steve Eisman, with Danny Moses.
Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.
Hi, this is Steve Eisman, and welcome to another episode of The Real Eisman Playbook. I'm really pleased to say I have a recurring guest, an old friend, former partner from my big short days at Frontpoint, and who is now also a podcaster, Danny Moses, who runs a podcast called On The Tape. Danny, welcome back. Great to be here, Steve. You're now lapping me on the podcast arena, just so you know. You went from zero to 60. I'm still stuck at 20, But thank you for asking. Thank you. Thank you. So, you run a podcast called On the Tape. Tell us a little bit about some of your guests, things that have been happening on your podcast that are of interest. Yeah. So, I have guests from various fields. Some are technicians, some are strategists. We just had R.P. Eddie from Ergo, who does geopolitical consulting, whose clients are sovereign wealth funds, hedge funds, governments, corporations. Really, really enlightening. And part of the offering for On the Tape now also includes our sub stack, what do we do in contrarians at the gate? And just this week- Which you work out with- With Porter Collins and Vincent Daniel, who you obviously know very well. He had money a couple weeks ago. So now it's kind of all blended together. And Clear Street is now sponsoring-
Who's Clear Street? They're a broker dealer on Wall Street that's kind of grown over the last few years. And their service offering is really catering to every type of investor. And they do lending, their clearing, everything. And so we're excited to partner with them. We're going to be doing events with them. But I bring that up because it's now kind of all coming together. What started out is just on the tape that I started with, you know, the guys at CNBC, Dan Nathan, Guy Adami, and you've been on the show as one. Then they have three or four other properties now. This has now become part of this unit.
So it's been great. And, you know, writing, which I know you like to do, it's a great expression. We do a Friday Night Dirty podcast, kind of like your weekly rap. We have it called the Friday Night Dirty. We just sum up the week and kind of what's out there. And so it's been a lot of fun kind of growing both sides. So, let's start with your show. So, you interview people like I interview people. Tell us a few guests in the last, let's say, two months that you thought were particularly interesting. What did they say and what did you learn? So, actually, the podcast that just came out this week was with Ergo, which is a political think tank type of geopolitics consulting company.
Read the whole transcript
And R.P. Eddy, who went to college with Porter Collins at Brown, runs it and gave us his thoughts on everything going on from geopolitical to midterm elections. He wrote a book in 2017 about Cassandras and how they're not just chicken littles and what to look for. And some of the stuff that came up that was really interesting was Fukushima has led to a power shortage in Europe because they went anti-nuclear, things like that. What was Fukushima? Yeah, that was a nuclear facility in Japan that burnt because of the tsunami that occurred. And the point being, the reaction to Fukushima around the world by not wanting to build nuclear and use, you know, and that stuff has created potentially the stuff we're in today up to and including AI power issues that we're now, as you know, you've talked about this at length.
How are we going to meet this demand? Right. A lot of it's nuclear. I mean, so it's amazing how one event- Which we might have had, what you're saying is, but for Fukushima. Correct. So it's just how those things. And so that was really interesting. Dennis DeBuscher was on recently. the son of the great Dave DeBuscher, who runs 22V Research. Wait, wait. Yeah. I know who Dave DeBuscher is. Yeah. And you know who Dave DeBuscher is. Well, tell the audience, who was Dave DeBuscher? Until recently, one of the last remaining, obviously, was part of a team that won the NBA championship with the Knicks in the 70s.
He was the powerful. Yeah, he was amazing. And 22 was his number. So, Dennis DeBuscher, who we know from ISI days and everywhere he's been, he's a strategist and an economist. He started a firm called 22V, and you know a lot of the people that work with him, including Bill Hebel. who you're a former bank analyst. I don't know Bill Hebel is there. You've got to get him on. Recently running bank research there. Oh, my God, I've got to get Bill on. OK. So, Dennis was there. And, you know, Dennis was saying he thought the market was going to hit $7,800 this year on the S&P. That's what he said last time he was on a market.
He was right. He thinks the Fed wasn't going to cut rates. This is even in the face of rising inflation. I thought they wouldn't cut rates. Sorry, I thought they wouldn't raise rates any longer for the rest of the year. I thought he was wrong about that. No, but recently he came on and said, no. So, the September chance, or the, sorry, the October chance, which has now dropped chance. Anyway, so, that's been great. So, it's been, you know, it's a nice mix of people that come on. And some come back on every quarter or so. Luke Groman, who you need to have on. Who's that? He's a macro guy, really amazing.
Forest for the trees. He's been long gold for years. And brilliant guy. And thinks away. You know, I like to get people on that don't think like everyone else does, right? And this is, so, kind of. All right. So, let's talk about, let's start with the Fed. OK. Now, let's talk about Besant. I can't figure out what Besant is trying to accomplish. So, he's Fed or Treasury? We're going to go to both. We'll do both. OK, fine.
“Raising a quarter point here, stopping, cutting a quarter point here, buying $20 billion worth of 10, it's an ant.”
“there's actually more wealth, there's more household wealth in the stock market right now than there is in people's homes.”
Let's see if we can narrow it down to 20 minutes. There. Just random thoughts. Give me some random thoughts about what you're thinking about. So... And I'm sure you've had tons of guests to talk about it. Absolutely. So, weave all that in. So, obviously, not a tech person, right? Me neither. But you know what? Yeah. You don't have to be a tech person to understand what's going on. Correct.
“The math didn't work. You could have wrapped that fiber around the globe 10 times.”
on Met and Microsoft on pullbacks. Why? Because they have an incredible business. Yes, their CapEx, in some cases, has now gone negative for the first time. They can turn that... Their cash flow has gone. The cash flow, sorry, cash flow has gone. They can turn off that spigot whenever they see fit. They said, we're done. We're done. It's enough. So, where is the mismatch between the capacity that we're building, the time that it's going to take, the demand, and the economics of the products which are being created? I have no idea if OpenAI is going to make it or not. I know we've had people on the show talk about it. Anthropic. I think are burning cash like crazy. At some point, you're going to need to show that you can make money, a profit. I don't know where the math ... Show me the math, both on the enterprise demand side and the consumer demand side with token and all that. Again, I won't pretend
to know all that. But common sense tells you that if you were to stop and do the math on all the loans, the amount of debt that's gone out there, what the prices are that people are charging, over time, you're going to create more chips. GPU pricing is going to come down. You can have the next generation, the next generation. China's coming, open source, this, that, and the other. So, to me, it's not something I want to short. There's a few names out there that aren't as financially sound as some of the others. Like who? CoreWeave, which I think is vulnerable. Why is CoreWeave not so financially sound?
It's really like a we work of the trade. Yes, they're buying chips. They have big clients. And now they've gone to renting out shorter term. So, they have a mismatch, potentially, on their balance sheet. They have $51 billion in debt, which includes leases, obviously. You know what's funny? Yeah. You just said that Corweave has $51 billion in debt. It's a lot of money. Yeah. But we're sort of... Numb? The numbers are so big. You're numb. Like in the context of Corweave, $51 billion, when you take a step back and you actually think about it, you say to yourself, that's frightening. But you actually have to take a step back.
That's my point. Because the numbers that are being, you know. They're spending a trillion dollars this year. So, when you say that CoreWeaver has $50 billion in debt, my initial reaction was, eh, whatever. Whatever, right. Who cares? It's not so big. Exactly. When are they going to make money? So, if you're not making money, you need a path to profitability. Could they make money at some point? I haven't done enough analysis. My point is that that's not a stock I want to own to express my AI theme. Okay. Okay? That's just not.
“The minute the thing started to drift lower, you and I both know what happened, Wall Street started to pull the warehouse lines.”
One of the things that bothers me, and I'm like you, I'm not going out telling people to short the whole AI trade.
I think that would be insane. But one of the things that concerns me is the concentration risk. So, just as an example, NVIDIA reported maybe like a month ago, I think revenue was up 110%. Everybody said, hurrah. But the next day, you got the 10Q. And the 10Q said that 70% of NVIDIA's accounts receivable is from five accounts. I was like, and I remember when we were at Oppenheimer, there was a software analyst there. Melissa Eisenstadt? Melissa Eisenstadt. And I remember she told me this story where the bankers came to her with a software company to bring public. And it was a very fast-growing company, but she dug down into the numbers, and she realized that the company had like three customers.
And she said, that's too concentrated. I'm not going to take a company public that has three customers. Well, NVIDIA is the largest company in the world, and 70% of its revenue comes from five customers? There's just a tremendous amount of concentration risk. And the other part is that so much of this whole chain is dependent upon the health of OpenAI and anthropic, which I can't handicap. Nobody can handicap. We don't even have any financials at this point. It's a national security issue in the sense of the economy, the reliance we have right now on the growth. It's contributing a huge amount of growth to GDP.
Oh, it's at least half of GDP growth. It's massive. And so, you can't afford to take a step back and take a deep breath. No one on Wall Street or in Washington wants to say, oh, let's slow it down a little bit. It's the last thing they want to see. So, what do you make of the whole AI is going to destroy planet Earth routine? We'll figure it out. Listen, again, I don't know the technology enough. It's a little scary, the stuff that I've seen, approaching it from a non-investor lens. We already have cybersecurity issues going on all over the place. Hopefully, this could be used in a way to help cybersecurity.
but it seems like there's some rogue agents. I mean, I've watched these videos. I try to educate myself and I get so scared when I watch it. I'll never, like, how do you try? that. If that's going to happen, there's going to be things that happen. It happens in every technology. But I can't predict it. I think some bad things are going to happen. Just
“For one reason and one reason only, they need to fill it. They need to fill these deals. Institutions don't pass on good deals.”
What else should we talk about? I mean, let's talk about the media world that you've entered here. I would love to ask you some questions. Okay, go ahead. You know, you've been involved in the markets longer than I have, a few years longer than I have. And I made the transition to kind of this media podcast before you do. And you've always been a professor. You've always loved to teach and to learn. That's always been your thing. If you didn't go to Wall Street, you'd have been a professor at Columbia. That's what you would. I could see you in the outfit. You'd be spectacular.
Probably a pipe. Long cardigan. Long cardigan sweater. Probably a pipe at this point. But so I think there's, I want to ask you the enjoyment. You asked me, the opening question was, what have you learned from your guests? I love learning new things. Me too. You do as well. So talking about the journey, because you were on On The Tape four years ago, you came on a few times. Right. And you were good on it. I think you were a little bit, you weren't comfortable, not because you weren't comfortable what you were talking about. You're kind of like, what is this? What am I supposed to say? And now, look what's happened.
So, congratulations on what you're doing. And I know who the brains are behind the operation. That would be my wife, Valerie. Yes, obviously. And so, that's a great team. So, talk about your journey. Sure. Yeah. So, we started April of last year. I interviewed Dan Clifton of Evercore. We had the fortune of, it was sort of weird, I had scheduled him just because I just had scheduled him to be my first guest. And it turned out that I interviewed him like two days after President Trump announced the tariffs. So, couldn't have been more relevant. I remember we did the interview and I think we had 5,000 views.
And we were like, wow, 5,000 people. Why don't you watch me? How crazy is that? And... So, look, it took time. First of all, I found that I could interview people, and then we added the weekly wrap, which is, when I wrap up the weekend, I just speak into a camera. And the first several times I did the weekly wrap, it was awkward, because you're looking into a camera, there's nobody here, you're getting no feedback, and you're just talking. It took time to sort of ... Sounds like being a research analyst on Wall Street. Exactly. And so, I think the sort of the niche that we've sort of developed, which you intimated at, is I'm not here to tell anybody that they're wrong or to convince them that I'm right and you're wrong.
I'm just trying to educate people so that they have a better understanding of what's going on. And I try and do that in a very non-confrontational kind of way. So, and it sort of took off. It's interesting. I need to ask you on that because I'm flipping it completely. Yeah. We're sitting on the desk. You have money at risk. As a portfolio manager running your fund, you would do everything you could to explain your side of the story to an analyst that you either thought wasn't being, not honest, but wasn't really looking at these things from the standpoint that you were. It could be a lender. It could be whatever it might be.
And you would get heated and you would get very upset. I would. Not even because maybe the stock wasn't working yet because you're like, are you like you not see what I see right and that's because you were coming at it from a different angle right you you're you have a position on you're not forcing them to do anything but my point is that it's interesting to see how you can take you literally can wear that hat and wear this hat because you have to have a little I'm a little older yeah so I'm not quite as emotional as I used to be and I've I've sort of taken the attitude that what I'm trying to accomplish is education there's some great stories Steve I could we could can I tell a couple stories? Go ahead. Okay. This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense.
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The story I get most, the question I get most. The question you get most. About the big short, which is 100% true, because the book was 100% accurate, the movie was 75% to 80%, is this, you holding up the zero. And I can't tell you, I still get emotional when I think about watching you actually do it. People said, did he really do that? I go, he did that. I mean, Ryan Gosling did a much better job of narrating. You were in the room. You were sitting next to me. It was just you and me. That's right. I mean, the room was full of fixed income people. And I'm next to you, ho-hum, ho-hum, option one guy up there.
I'm like, I go, Steve, what are you doing? And you raise your hand, and you show a zero. And the guy's speaking and literally said, I'm sorry, is that a question? No, that's not a question. There's a 0% chance your losses are going to stop at 5%. I'm sorry, what? Zero. And then he's trying to get his wits about him, the itch and our block guy, option one guy. And literally, as he's about to come back at you or say something, or hopefully you go away, your phone rings. It was Valerie. Valerie's calling you and I'm looking now your phone's ringing in this thing. We just went to dead silence when you stopped everything by doing the zero and you walked out and you left me there and I did this. I literally, I've never, like you see it in movies. I literally went like this. I didn't know what to do. And we were sitting in the middle. Like it wasn't like I could get up and go. So I stayed for the rest, but you actually did it. You actually did it. And the dinners and I was, I can't even make that up. Like the stuff that went on there. It's a once in a lifetime. It was crazy. And the other thing people always ask is, no one insinuates that we're lucky. You know, I always say it as it was an opportunity
trade. We couldn't understand how you could effectively express the short theme for these companies in the form of a bond, which you're shorting at par, which can't go really up more than par, can go up maybe a couple of points and paying two to 3% coupon. So if you're wrong, you're wrong for a year, you lose 5% and you're out. Michael Burry, I always tell this, we didn't know him at the time. And if that had been us, I think you would admit, if we put that on in 2004, No chance we're around in 2006. Not even possible. We've already been out of business. Yes, exactly. For once in our lives, our timing was impeccable.
Steve, the day we put it on, that trade was small. We started out small. Come in the next day, and immediately the marks that we get were in our favor. Right. Not once did it go against us. Every day would start, Danny, did you get the marks? Anyway. Right. So, everybody understand, when you do a credit default swap on subprime mortgages, which is what we did, There's no screen. It's OTC. It's not like, during the day, you and I are looking at the screen and we're going, oh, the price is changing to our benefit. We would have to wait until the end of the day, or sometimes in the morning, to get prices.
And you were always the one to get the prices. And I would always say, Danny, what's the price? What's the price? How are we? We're starting out good. We're up a little bit to start the day. So it changed our mindset. So it really was a useful tool. But that was the other misnomer. People are like, oh, I go, no. There was a long book. There was a short book. And if we had wanted to, that book could have been much bigger. But we were doing the thing that we thought was responsible. So anyway, wouldn't trade those times for anything. Even though it took years off of our lives, that was amazing. Certainly did.
I do want to ask. I do want to talk about something else, though. I want to talk about the debt and the deficit. Okay. Because I know you care. I do care. You care as an American. By the way, I actually wrote on Substack, you can do those chats and notes. Yes. So, I wrote a note today comparing what's happening in France versus what's happening here, because there are real parallels. The debt to GDP in France and the U.S. is roughly the same, about 120%. France, like us, is completely, what's the right word, politically paralyzed. And they're beholden to the euro. Right. But they're completely politically paralyzed about cutting the deficit, to such a degree that one of the people who's running for president, Marie Le Pen, actually wants to reduce the retirement age from 63 years to 60, which would increase the deficit even more.
Rates are now marching higher in France. It's not that I don't have concerns about the deficit. It's just that, because we are the reserve currency of the world, and the entire financial system of planet Earth functions on treasuries, I don't see the alternative. Put it this way. If there was a serious alternative to treasuries... we'd be in trouble. Because people could say, I'm not going to own treasuries. I'm not going to do repos with treasuries. I'm going to do repos with, I don't know, Bitcoin, whatever. And if that was a possibility, whatever problems that you're concerned about with the deficit would be much more important. So, let me push back. So, we have no appetite to cut spending either. No kidding.
Nobody does. Nobody. Neither side. Sorry. We're just like the French, in that sense. So, we wake up one day, and in France, they decide to send yields higher because they're concerned about their ability to fund themselves. The List Trust moment three years ago in the UK, same thing. She's gone. I mean, because you have these periods of time. We might be experiencing a little bit of that in our bond market. The reason that, OK, we're moving higher because of economic growth. OK, we are, to some degree. But maybe part of it's a term premium of what people risk people will. Let me give you a couple stats here.
The dollar is 57% of the world's reserve currency. It was 71% a couple decades ago. It's dropping. It's still dominant. It's not going anywhere. Central banks, global central banks, number one holding is not U.S. treasuries. It's gold at 27%. Treasuries are 22%. And now gold's gone up. It's the reason it's obviously passing it to a degree. And then the brick nations were talking about, for a while, coming up with their own currency. So there are things underpinning that concern me. we're playing with fire in the sense of, I think we take for granted that the dollar is still going to be the world's reserve currency.
But listen, you could drive yourself crazy. I'm not, you could literally drive yourself crazy. It's not sustainable, but the math, if this was the balance sheet that you were underwriting USA Inc., I think Mary Meeker did it in 2008, whenever that was in 2008 or nine. Remember her, Morgan Stanley, she actually did a, let me treat the USA as if it was a company. Right. And you analyzed it. So anyway, there's some, there's some things that just concern me. I don't know, to your point, I mean, who's willing to take pain to help us get us out of it? I believe QE is coming again. Do you really? 100%.
Because? I mean, the only way out. I don't know how you're going to—you're going to have to print your way out and deal with the consequences later.
