How the Billions Are Made Today
If you didn’t know, John Paulson (no relation to former Treasury Secretary and Goldman Sachs chief Henry Paulson), apparently is the guy who’s made the most money the last two years or so. In the world.
After making $4 billion or so in 2007, Paulson made another $4 billion last year. Himself. As in one person.
For that kind of dough, you’d figure Paulson must have done something truly amazing.
Like cure a disease. Or design a better, faster computer. Or come up with a more productive, pest-resistant strain of rice (like Norman Borlaug, who just past away, did).
So, is that what Paulson did?
Paulson made his money running a Wall Street hedge fund that figured out how to use exotic credit instruments (“collateralized debt obligations,” “structured asset-backed securities,” and the like) to bet on falling housing prices.
Needless to say, his ship came in, big-time.
Paulson’s certainly better off.
P.S.: Show me an economy where the big winners create nothing of real value — or worse, benefit from exploiting market excesses and dysfunction — and I’ll show you a dysfunctional economy.