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Even Wall Street Now Hates the Rich
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dado
01/09/09

In reply to Even Wall Street Now Hates the Rich
The second picture is no longer of Ed Forst.
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ifstone
01/09/09

In reply to Even Wall Street Now Hates the Rich
Folks here don't seem to understand financial markets. Short sellers get unfairly scapegoated when in fact studies have suggested that they serve a useful function by aiding price discovery and market liquidity. The bans on short selling of financial shares didn't stop them from falling and are widely understood to have been empty political gestures.

And a big weakness of the housing market that many have pointed out is that it's very difficult to be a short seller, so prices tend to ratchet up unless there's an outright crash. John Paulson and others discovered a way to indirectly short housing by buying credit default swaps, and a public exchange has been proposed for CDSs to aid market transparency: if everyone could have seen that people were buying CDSs on subprime debt, that would have signaled trouble much sooner.

And this story just reminds us that all that "lost" money went somewhere, to short sellers, to folks who were smart enough to sell property at the right time, etc. That is probably not going into Icelandic government bonds. It'd be interesting to trace the money flows during a crisis like this and analyze the real costs/benefits to the economy overall.
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bboston88
01/09/09

In reply to Even Wall Street Now Hates the Rich
No one is worth that kind of money. No one is irreplacable, not even these guys who think they are so invaluable (then why are they in the current situation..). The crazy salaries/bonuses are justified by saying it's necessary to attact the top talent. Well obviously the top talent isn't so talented and this is just a way to pad everyone's bank account. I hope this stops, it sickens me.
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ADismalScience
01/09/09

@bboston88:

No one is worth that kind of money. No one is irreplacable

I disagree. Now what do we do, have a rock-paper-scissors contest? Argue with falsifiable information, not boring platitudes.
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dado
01/09/09

In reply to Even Wall Street Now Hates the Rich
As long as we privatize the profits and socialize the losses, there will be folks like these.
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ADismalScience
01/09/09

@dado:

All aspects of Paulson & Co. are private - Hedge Funds are not eligible for TARP funds or any form of taxpayer assistance. Even the most famous Hedge Fund bailout in history, LTCM, was privately funded (though publicly coordinated).

Keep slinging that slogan around, though!
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dado
01/09/09

@ADismalScience: Was not referring to Paulson specifically, just the fact that risk seems to be assymetrical in the current environs. As far as slinging slogans, if you have to spend money to make money that means when the rubber meets the road we'll be cooking with gas, as long as we are on the same sheet of music. You want a friend? Buy a dog. I am now going to go big, and go home, because if you are too big for the little trades, you're too little for the big trades. Be a hitter, not a chump, buy these bonds, gotta jump.
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ADismalScience
01/09/09

@dado:

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depardoo
01/09/09

In reply to Even Wall Street Now Hates the Rich
The ironic thing about Paulson is that his firm does "merger arbitrage". The subprime/real estate bet he made was totally outside his field, and that's what he made the lion's share of his money on in 2007.

I've met him. He has the personality of a turd.
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friend_of_a_friend
01/09/09

@depardoo: Where do you get your info? His two biggest winners in 2007 were Paulson Credit Opportunities and Credit Opportunities II which, presumably, made their money on credit shorts.
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depardoo
01/09/09

@friend_of_a_friend:

My information was from a host of WSJ articles last year. But his main business is described as merger arbitrage.
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registered
01/09/09

@depardoo: What does personality have to do with it? Brains had more.
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depardoo
01/09/09

@registered:

Personality has nothing to do with it. A mere observation. I think he is a very smart guy.
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blahniksforlife
01/09/09

In reply to Even Wall Street Now Hates the Rich
"And to the victor go the spoils." Nice if it wasn't just the flipside of what got us here in the first place--highly leveraged bets with other people's money. If Paulson had been wrong we might be bailing him out a la Long Term Capital Management. These returns sound great until you look around at our economy today and see the mess they leave behind.

To the victor go the spoils and everyone else foots the bill for the losers. These kind of returns are only possible with incredibly risky leveraged speculative investing that can't sustain downside losses. And we all end up paying for it.

Paulson's no genius. He just got lucky this time.
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ADismalScience
01/09/09

@blahniksforlife:

What makes you think Paulson used leverage?

He has capital banging down his doors.
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Iceland Spar
01/09/09

@ADismalScience: I think its a pretty safe bet that a hedge fund used some leverage.
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ADismalScience
01/09/09

@Iceland_Spar:

Not necessarily! I understand the point you're making, but it's a common misconception that all these products are levered into oblivion. Many hedge funds don't borrow for anything but basic cashflow management.
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Smitros
01/09/09

In reply to Even Wall Street Now Hates the Rich
This is much cooler than polar bears resorting to cannibalism.
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registered
01/09/09

@Smitros: @ADismalScience: I believe JPaulson made the fortune in 2007. Added to it in 2008, but the first 2 bn is always the hardest.
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ADismalScience
01/09/09

In reply to Even Wall Street Now Hates the Rich
Paulson made a ridiculous amount of money for Paulson & Co.'s investors in 2008, and to the victor go the spoils. Keep in mind, he's independent and lives/dies on his privately-held corporation's profitability in investments - if one of his company's funds ever takes a step below watermark he earns little. My only confusion with the man is why he's still in the game.

And good news! Paulson & Co. launched a "Recovery Fund" in October as we muck through the depths of this whole miserable recession - and if this guy believes in capitalism roaring back, you should too. Because he's smarter and richer than you are.
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Uncle_Billy_Slumming
01/09/09

@ADismalScience: Wasn't Paulson just mentioned this week as one of the companies ready to lend a helping hand by buying up the smoking remains of Indymac at fire sale prices?

Check out his buddy Paolo: Yee-haw!

[online.wsj.com]

Wouldn't it be fun to see a shaky Greenspan trying to slice the garlic with a razorblade at Club Fed?
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ADismalScience
01/09/09

@Uncle_Billy_Slumming:

Paulson's not alone, everyone is really excited for the coming distressed debt boom.
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Uncle_Billy_Slumming
01/09/09

@ADismalScience: Who's everyone? Oh you mean the slimy people?
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ADismalScience
01/09/09

@Uncle_Billy_Slumming:

What's so slimy about investing? I don't come to your job and get all self-righteous.
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Uncle_Billy_Slumming
01/09/09

@ADismalScience: It wasn't a personal sleight, Dismal. Shall we agree that there are different types of investors? I'm more concerned about the kind that destroy companies and economies to allow them to buy them cheaply.
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ZenWarrior
01/09/09

In reply to Even Wall Street Now Hates the Rich
I'm going to go to their home and punch them in the face.
The pleasure is more than worth doing the time.
Then I will negotiate with the jailer for $50 million to stay two extra years in jail.
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Uncle_Billy_Slumming
01/09/09

@ZenWarrior: That would lend itself quite well to a wii punching-game.
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homoviper
01/09/09

In reply to Even Wall Street Now Hates the Rich
Envious.
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MrInBetween
01/09/09

In reply to Even Wall Street Now Hates the Rich
Years ago, I knew a Skippy McGee. He usually had booze on his breath. Also known as "Three-Card Skippy," his second home was the dog track. Not the same guy, but close.
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Kid Twist
01/09/09

In reply to Even Wall Street Now Hates the Rich
"Skip" and a Roman numeral in his name? I think we have a new winner: [gawker.com]
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Uncle_Billy_Slumming
01/09/09

In reply to Even Wall Street Now Hates the Rich
"But what do they actually do, like day-to-day?"

Enslave you with debt.
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dado
01/09/09

In reply to Even Wall Street Now Hates the Rich
The second picture is actually of Ed Forst, but no matter. The same applies.
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The Curse of Millhaven
01/09/09

In reply to Even Wall Street Now Hates the Rich
Paulson made a grotesque amount of money in a system that should not allow such things. On the other hand, it seems goofy to pillory the few who saw this coming and acted on their convictions.

The other two can sew socks that smell.
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flossy
01/09/09

@The Lord Humungus: The system shouldn't allow what? Making that much money, or making money by short selling?
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The Curse of Millhaven
01/09/09

@flossy: Making money by short selling. Well, and more generally making such large amounts of money without producing anything of value OR providing capital for people who do so.
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flossy
01/09/09

@The Lord Humungus: One could argue that short selling is an important check/balance in our current (admittedly messed-up) financial system.
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