Yesterday, Krugman did a little gloating on his blog. Seems a year ago, Business Week ran an article about a guy named John Paulson, a hedge fund manager who was betting big on a a major uptick in the housing market. The article contrasted the obviously right Paulson (since he was rich and a hedge fund manager) to the gloom and doom Krugman, who clearly had his head up his ass.
Well, Paulson’s bet didn’t pay off, as even I could have told him.In fact, according to today’s Times, pretty much everything he has touched lately has turned to shit.
This may be because Paulson has had to confine himself lately to trying to predict the market instead of gaming it. The Times article states that Paulson previously “made billions during the financial downturn betting against the subprime mortgage market”, but that’s putting it kindly. The word “betting” implies you have a chance to lose, but Paulson didn’t. He designed securities that would fail, got Goldman Sachs to market them to suckers, and then made a pile betting against them. Oddly enough, though the facts are clear, and the government has actually seen its way clear to bringing a civil action against Goldman, they have not pursued any charges, civil or criminal, against Paulson. Ahh, the rich really are different than you and me, aren’t they?
Anyway, it’s nice to see that Paulson is on the ropes, and we can only hope he’s down for the count. It couldn’t happen to a nicer guy.
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