Replies

Thanks for bringing up John Paulson, the “quiet man” in this meltdown.

John Paulson was one of the biggest beneficiaries of financial meltdown, using [then] little-understood strategy of buying massive quantities of CDS “insurance” (without underlying CDOs) and short-selling financial institutions.

http://fundrace.huffingtonpost.com/neighbors.php?type=name&lname=Paulson&fname=John

John A Paulson
President
Paulson & Co, Inc.

$25,000 Updated Q4/2007
New York NY Donation to Democratic Senatorial Campaign Committee

$2,300 Updated Q3/2007
Donation to Citizens For Arlen Specter

$2,300 Updated Q1/2008
Donation to Friends Of Max Baucus

$2,300 Updated Q1/2008
Donation to Lautenberg For Senate

$2,300 Updated Q3/2007
Rudy Giuliani

$2,300 Updated Q1/2008
Donation to Friends Of Senator Carl Levin

$2,300 Updated Q4/2007
Donation to Friends Of Dick Durbin Committee

$2,300 Updated Q3/2007
Donation to Citizens For Arlen Specter

$2,300 Updated Q1/2008
Donation to Friends Of Max Baucus

$2,300 Updated Q1/2008
Donation to Lautenberg For Senate

$2,300 Updated Q4/2007
Mitt Romney

$2,300 Updated Q1/2008
Donation to Friends Of Senator Carl Levin

$2,300 Updated Q4/2007
Donation to Friends Of Dick Durbin Committee

$1,000 Updated Q1/2008
Donation to Virginia Foxx For Congress

$1,000 Updated Q4/2007
Donation to Managed Funds Association Political Action Committee

Articles below are worth reading in their entirety :

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http://www.cnbc.com/id/28814840/print/1/displaymode/1098/
The Man Who Made Too Much
January 23, 2009

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Paulson is smart enough to know that at this particular moment in history, the less he’s heard from, the better. The simple reason: He is not suffering. In an era in which losers are universal and making a profit seems somehow shady, Paulson is the most conspicuous of Wall Street’s winners. Paulson & Co.’s funds (with an estimated $36 billion under management and growing by the day) were up a staggering $15 billion as the markets teetered in 2007; one fund gained 590 percent, another 353 percent. All this reportedly garnered him a personal payday of $3.7 billion, among the biggest in history. In 2008, his funds didn’t climb nearly as much but were still successful enough to put him at the very top of his profession. By scoring returns of this magnitude, Paulson has dwarfed the success of George Soros, whose currency trades in the 1990s made him so much money that he has spent much of the rest of his career atoning for them.

Paulson makes no apologies. During our conversation in his conference room, he describes in detail how he pulled off the greatest financial coup in recent history—a two-year bet that the calamity we are now experiencing would take place. It was a megatrade involving dozens of financial instruments, along with prescient wagers that banks like Lehman Brothers would eventually go under.
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http://www.cnbc.com/id/26885945/print/1/displaymode/1098/
Guess What? The Man Who Shorted Subprime Is RICHER (Pt 1)
September 25, 2008

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Earlier in his career, Greene won and lost a real estate fortune, and when his portfolio rebuilt itself, he didn’t want to get burned again. He wanted a hedge.

So two years ago, he “borrowed” an idea from his friend (at the time), hedge fund giant John Paulson. Paulson told Greene he was starting a fund where investors could short the subprime market though credit default swaps.
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Three weeks later, Bear Stearns collapsed.

Then a funny thing happened. While the rest of the market became illiquid, in Greene’s corner of the universe trading ramped up. “It’s the craziest thing,” he says. “We’re in a time where there’s record illiquidity, but in these positions, starting about four or five months ago, they became completely liquid. I was able to obtain on every one of these positions multiple offers.” He thinks that happened as investment houses started to clean up their books post-Bear.

But one night last week he didn’t get any sleep. Suddenly it looked like “Mother Merrill” might go under, and Greene still had a lot of money tied up with swaps there.
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http://online.wsj.com/public/article/SB120036645057290423.html?mod=todays_us_page_one
Trader Made Billions on Subprime
John Paulson Bet Big on Drop in Housing Values; Greenspan Gets a New Gig, Soros Does Lunch
JANUARY 15, 2008

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Also key: Mr. Paulson didn’t turn bearish too early. Some close students of the housing market did just that, investing for a downturn years ago — only to suffer such painful losses waiting for a collapse that they finally unwound their bearish bets. Mr. Paulson, whose investment specialty lay elsewhere, turned his attention to the housing market more recently, and got bearish at just about the right time.

Word of his success got around in the world of hedge funds — investment partnerships for institutions and rich individuals. George Soros invited Mr. Paulson to lunch, asking for details of how he laid his bets, with instruments that didn’t exist a few years ago. Mr. Soros is famous for another big score, a 1992 bet against the British pound that earned $1 billion for his Quantum hedge fund. He declined to comment.
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http://online.wsj.com/public/article/SB120036270913390155.html
In Beverly Hills, A Meltdown Mogul Is Living Large
JANUARY 15, 2008

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Relaxing at his 40,000-square-foot mansion, Palazzo di Amore, Jeff Greene reflects on a stellar 12-month run. He snatched the estate out of receivership for $35 million in a bidding war. He got married in a spectacular wedding here with boxer Mike Tyson as his best man. And he is up more than half a billion dollars on a bet that the housing market would crater.

He may have lost a friend in the process: John Paulson, a hedge-fund manager who devised what proved to be a wildly profitable strategy for betting against risky mortgages.
.....

Yet two years ago, an undercurrent of concern about the economy had begun to trouble him. Recalling the pain of losing his first fortune, he consulted a range of smart people in search of a way to hedge his bets. One was Mr. Paulson, whom he’d met decades earlier in New York’s Hamptons, the same playground of the affluent where he later met Ms. Chan.

Mr. Paulson was convinced the market for risky “subprime” home loans would implode. He outlined a sophisticated securities trade he was crafting for a new hedge fund. It involved derivatives — contracts whose value shifts with some other asset’s value — and would need an investment bank’s participation. The bank would have to be convinced that a mere individual, as opposed to an institution, qualified to be a counterparty in such a transaction. Mr. Greene says he asked Mr. Paulson, “Can I do this trade myself?” and was told, “You’ll never get approved.”
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His hedge-fund friend, Mr. Paulson, didn’t want other investors duplicating his trades. “When I mentioned to him that I had already done some of this on my own, he kind of was surprised and seemed to be upset,” Mr. Greene says, adding that Mr. Paulson didn’t allow him into his new fund.

Mr. Greene says he wishes he could have invested in the fund as well as doing his own trades. He also holds out hope for their friendship. Mr. Paulson, he says, “did send me a nice card on my wedding.”
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