Day: January 16, 2008

Article: Largest Payday in Wall Street History

Trader Made Billions on Subprime
John Paulson Bet Big on Drop in Housing Values;
Greenspan Gets a New Gig, Soros Does Lunch

By GREGORY ZUCKERMAN
January 15, 2008

On Wall Street, the losers in the collapse of the housing market are legion. The biggest winner looks to be John Paulson, a little-known hedge fund manager who smelled trouble two years ago.

Funds he runs were up $15 billion in 2007 on a spectacularly successful bet against the housing market. Mr. Paulson has reaped an estimated $3 billion to $4 billion for himself — believed to be the largest one-year payday in Wall Street history.

Now, in another twist in financial history, Mr. Paulson is retaining as an adviser a man some blame for helping feed the housing-market bubble by keeping interest rates so low: former Federal Reserve Chairman Alan Greenspan (see article)

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Article: Man Who Enabled Bubble, Admits Recession

For years, we’ve been saying (on AlansBubble.com and our old blog) that Greenspan is the root cause of America’s credit and asset bubbles (especially housing). Now, belatedly and without accepting any blame, he admits it’s caused a recession, which is also something we’ve been saying for months. He’s also signed up with the guy — John Paulson — who’s made the most off the debacle (see article). Hat’s off the Paulson, but shame on Greenspan..

From the Wall Street Journal:

Greenspan Sees U.S. as Likely
In Recession, or Soon to Be

By GREG IP
January 15, 2008

The U.S. is probably in or about to enter a recession, former Federal Reserve Chairman Alan Greenspan said.

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