It's not lost, it was never money to begin with. Our hedgie friend may have different lines of business, but a lot of these securities are based on nothing, no money, no assets, no income streams. Paulson is putting emphasis on MBS, but those aren't the real problem, these are:
http://www.financialsense.com/fsu/editorials/amerman/2008/0917.html
It didn’t take long to read a little of that to realize that GREED and STUPIDITY are what is driving this.