We were short IKB in 2007 because we looked at what they were doing and it was madness. It was absolute madness. They were basically taking a German bank balance sheet and leveraging it up and going long all this toxic stuff to make an infinitesimal spread.
There is one unstated aspect that is vitally important to this whole thing. There was a participant at the table in these deals who didn't know he was there. In this case, it was the German taxpayer. But in many cases it was the US taxpayer, who was on the hook for banks making dumb deals. At the end of the day you can't put the taxpayer, who doesn't know that he or she is at the table in these speculative trades, at risk.
~James Chanos, president and founder, Kynikos Associates, CNBC's Squawk Box, April 27th, 2010