He’d been the first investor to diagnose the disorder in the American financial system in early 2003: the extension of credit by instrument. Complicated financial stuff was being dreamed up for the sole purpose of lending money to people who could never repay it. “I really do believe the final act in play is a crisis in our financial institutions, which are doing such dumb, dumb things,” he wrote, in April 2003, to a friend who had wondered why Scion Capital’s quarterly letters to its investors had turned so dark.
