Is That Like Charlie Sheen “Winning?”
John Paulson, one of the winners of the subprime crisis, is having a bad year. Investors are showing unusual patience.
–“Despite Losses, Investors Stick With Paulson“; The New York Times (11/2/2011)
Did you know that the housing bust has also had big “winners?”
People like hedge fund titan John Paulson, who Goldman Sachs allowed to select the worst-of-the-worst subprime debt to put into securities it sold, then bet against (can you say, “Jackpot!”).
Goldman Sachs ultimately made billions from those bets, of which it had to forfeit $550 million when the SEC accused it of wrongdoing (of course, it neither “admitted nor denied guilt”). Paulson, despite being involved up to his eyeballs, was never charged.
Leave it to Michael Lewis to succinctly diagnose the problem:
One of the hidden causes of the current global financial crisis is that the people who saw it coming had more to gain from it by taking short positions than they did by trying to publicize the problem.
–Michael Lewis, “Boomerang”
So, there you have it: we’ve apparently gone from “to whom much is given, much is required,” to, “to whom much is given . . . nothing is required.”
P.S.: when “Occupy Wall Street” types showed up at his Manhattan townhouse recently, Paulson released a statement saying — no joke — “instead of vilifying our most successful businesses, we should be supporting them.”