The man who called the 2008 mortgage collapse — immortalized in The Big Short — weighed in this week with a line that cuts to the core: “Never confuse debt for creativity.”

Michael Burry had been quietly building a position in GameStop (GME), the meme stock of 2021, based on a thesis he called “Instant Berkshire” — the idea that GameStop CEO Ryan Cohen could transform the company’s idle cash into a portfolio of smart acquisitions, Warren Buffett-style, without reckless leverage.

It was a genuinely interesting idea: GameStop had cash, a cleaned-up balance sheet and a CEO with a contrarian reputation.

Then Cohen blew it up.

On Sunday, GameStop announced an unsolicited $55.5 billion bid to acquire eBay. For context: GameStop, worth $12 billion, was trying to swallow a company worth almost five times as much.

On CNBC’s Squawk Box the next morning, anchors Andrew Ross Sorkin and Becky Quick pressed Cohen repeatedly on the financing. He hemmed and hawed.

Quick finally asked: “Where’s the rest of the money [coming] from?”

Cohen replied that GameStop could issue stock to close the gap. And that was enough for Burry.

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Your Rundown for Wednesday, May 6, 2026...

While Rome Burns, Berkshire Grows Record War Chest

Burry ran the numbers. He estimated the combined company (GameStop and eBay) would carry a debt-to-EBITDA ratio — Earnings Before Interest, Taxes, Depreciation and Amortization — of 5.2 times.

And if eBay pushed back to $65 billion, that ratio would balloon to 7.7 times — territory Burry called “bordering on distressed.”

His hard limits were clear. “Any which way I sliced it,” he wrote at Substack, “the Instant Berkshire thesis was never compatible with >5x Debt/EBITDA, never ok with interest coverage under 4.0x.”

On Monday, Burry confirmed he sold his entire GME position. Instant Berkshire was dead.

But Burry’s exit doesn’t live in a vacuum. It lands squarely in the middle of a much larger reckoning with debt, one your mainstream financial press has been slow to cover.

Jim Rickards, writing at Strategic Intelligence, calls it “a conveyor belt of losses” moving through the private credit market.

The numbers are staggering. We’re talking about a $5-trillion shadow lending system now facing its first real stress test.

Jim puts potential losses at 20% — or roughly $1 trillion. The subprime mortgage meltdown of 2008 involved about $1 trillion in bad loans… and nearly took down the global financial system.

“If one compares this [private credit crisis] to the 2007–2009 financial crisis,” Jim notes, “we are not yet at the Lehman Brothers stage. We are closer to the Bear Stearns hedge fund failures of 2007."

Early innings.

Meanwhile, over the weekend in Omaha, thousands of investors gathered for the Berkshire Hathaway shareholder meeting — the first under Warren Buffett’s successor, CEO Greg Abel. And Paradigm trading pro Enrique Abeyta was there.

Enrique: “The official theme of this year’s meeting was ‘The Legacy Continues.’”

Enrique’s takeaway reinforces the same lesson Burry’s re-learning now: Buffett's genius was about buying growth-oriented companies at a fair price and holding with iron discipline.

No excess leverage. No empire-building for its own sake.

The contrast couldn’t be more explicit. GameStop — a $12 billion company — trying to borrow its way to a $55.5 billion acquisition that its CEO can’t explain on live television.

At the same time, Berkshire just reported a record $397.4 billion cash pile under Abel, who is in no apparent hurry to deploy a dime of it.

Debt can accelerate a great idea. But it can also bury a mediocre one. This week, we got a very clear — and very public — reminder of which is which.

Market Rundown for Wednesday, May 6, 2026

S&P 500 futures are up 0.70% to 7,340.

Oil’s down 7.25% to $94.85 for a barrel of WTI.

Gold is up 2.70% to $4,692.20 per ounce.

And Bitcoin’s up 1% to $82,400.