Presenting John Paulson's Complete Les Echos Interview In Which He Is Bearish On Housing, Bullish On Gold

Tyler Durden's picture

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yabyum's picture

Been a lot of angst about gold/silver and the commodities in the last 72 hours, hell even goldmansucks sez so. I look at the prices and Iam not seeing any collapse.

DosZap's picture

GS take on Commodities did not include Gold.

They are still Bullish on it.

Ready for the D_I_P?


Thomas's picture

He notes, "We created a class of shares for our other strategies denominated in gold". What the hell does that mean?

Mises's picture

Rather than the base currency be USD, its gold.....If a client sells is stocks, his cash account is a gold account, not USD

NOTW777's picture

isnt this the guy that gets special GS deals - so is he fading the GS anti-commodity call

cowdiddly's picture

Just an asshole pumping his book of 3+ mill GLD shares. Same scumbag he always was.

tek77blu's picture

great commentary on depressed bargain uranium stocks post-japan crisis:

ghostfaceinvestah's picture

This guy is such a bullshitter:

Have you lowered your expectation of a rebound by 8% to 10% in property prices in 2011?

Yes. When I made this prediction last year was before the reform Dodd-Frank 2010. Since then, banks have virtually halted lending for home financing because of the lack of clarification on the rules. This will be difficult to have a rebound in property prices this year. But with any luck, if banks start to reconnect with mortgages, we could have a real estate recovery in 2012 and 2013.

Actually, dope, you were just dead WRONG about your call for an 8 - 10% rebound in property prices.  Anyone with half a brain knew that house prices would continue, and will continue, to fall for years.

But now you blame the fact that house prices have declined for the past several months (based on indices that are lagged by several months) on a bill which has only been clarified a few weeks ago (regarding regulatory risk retention and QRM)?

As for banks halting lending, the banks aren't doing any mortgage lending, and haven't been since 2008: the government is backing 98% of all new home loans.  So Dodd-Frank has had zero impact on that.

Pure fucking bullshit.  Why anyone gives this guy money is beyond me.  Just invest in gold yourself and save the 2/20.


redpill's picture

Agreed, and at the least it would be a finger pointed at the fraudclosure scandal that would have caused the large mortgage companies to pause, not Frank-Dodd regulation, half of which they probably wrote themselves anyway.


destiny's picture

The BS of the guy is up to the BS of this official, conventional review, newspaper in France speaks the truth on the financial situation.  The echos is not the worst, but it certainly isn't the kind of paper gold bugs will read...

kito's picture

absolutely, he was long and wrong on real estate the past few years, and dodd-frank has nothing to do with the malaise.

Tater Salad's picture

Ghost says.."Pure fucking bullshit.  Why anyone gives this guy money is beyond me.  Just invest in gold yourself and save the 2/20."


I say numbers speak louder than [angry] words:

Statistics [April 2004 - March 2011]   Unit Class* HFRI ED HFRX ED S&P 500 Monthly Return -3.23% 0.61% 0.18% 0.04%    1 Yr. CAR 6.77% 10.89% 2.10% 15.65%    3 Yr. CAR 11.49% 5.52% -0.67% 2.35%    5 Yr. CAR 26.76% 5.45% 1.00% 2.62%    Since Inception CAR (Apr-04) 21.06% 7.44% 2.55% 4.46% Maximum Drawdown -11.23% -24.79% -25.80% -50.95% Standard Deviation 13.94% 7.07% 6.64% 15.57% Sharpe (30d T-Bill) 1.29    0.75    0.09    0.22    Sortino (30d T-Bill) 4.70    1.10    0.11    0.30    Largest Month Gain 23.86% 4.74% 3.15% 9.57% Largest Month Loss -4.89% -8.19% -7.53% -16.79% % Positive Months 70.24% 67.86% 60.71% 66.67% % Negative Months 29.76% 32.14% 39.29% 33.33%


redpill's picture

Housing Sucks, and Gold is good.  In other news, Captain Obvious of the USS Noshit notes that the sky is blue, and Greek bonds are garbage.

Saxxon's picture

This is the kind of article you should take the trouble to read in order to know what the others are reading and thinking; and/or to know what Paulson wants you to think he thinks.

Paulson manages 36 billion; that's a very large whale.  We are all krill here (I am, anyway) so its good to think about the direction in which that beast may be turning.

I think I need to buy a gun's picture

lets think outside the box he said to buy up to 3 houses that means everyone is getting free houses. The prices are coming down yeah and will reset the whole system once everyone is grandfathered in on principle only or to save the dollar no loans at all.

DosZap's picture

I think,

Yes, by all means by 3 houses on the cheap.

And have them foreclosed on,because the taxes will be out of worldly highs.

Same for land, great investment (depending on locale), but how much are the taxes going to cost?.

More than you can afford to pay?, and you lose that also.

We have SO MANY viable investment choices do we not??

ghostfaceinvestah's picture

This is another gem:

Without restarting the housing sector and a minimum of 1 to 1.2 million homes built annually, it's hard to have a real strong recovery.

So more overbuilding in housing will solve all our problems, even though we have record levels of shadow inventory?

How about we just recreate the DotCom bubble instead?  That will create a lot of jobs.

Fucking brilliant, this guy.

narnia's picture

He just flat out called real estate wrong.  Dodd-Frank is stupid,  but it's a small rat shitting in the corner.  The 600 lb. gorilla is the market's inability to price these assets.  The banks are scared shitless to release real supply (I believe some of this crisis is manipulated).  Plus, a cloud of inflation hangs over interest rates, which paralizes this asset class more than any.  This is a jobless recovery, so no one out there can afford them.  This is just not something that is going to recover with government transfer payments & easy money.  Maybe foreigners will start to come in if the $ falls low enough.


We don't make anything in the US anymore.  We grow stuff, blow things up, chase drug "terrorists" around, peddle chemicals, think about stuff, finance stuff, server each other, educate foreigners & maintain massive government bureaucracies.  Where is all this excess capacity- in the social security administration, the armed forces or a trading desk at goldman sachs?  We're going to see prices increase whether we see one "real" movement in employment because most of what we consume was made elsewhere or relies on energy from elsewhere and the super $ looks like it has a two ton krytonite rock hanging from its neck.  We are going to see real inflation when something happens to put the $ velocity in play.   

bob_dabolina's picture

"But growth will resume in Japan next year already because of the reconstruction"


There will be reconstruction like there was in Pripyat.

Long-John-Silver's picture

The Overlord's have succeeded in their goal of turning land investment into a stupid move. They can take any land at any time using eminent domain, Elimination of tax exemptions, and property taxes so high they exceed the value of the property. A prime example of this is Detroit. It makes no sense to purchase property and improve it or attempt to use it as farm land as a non-corporate "small farmer". The American dream has become a nightmare.

DoctoRx's picture

The most surprising thing about this interview was that he appears to think that inflation is a few years off.  WTF?

High Plains Drifter's picture

Do you think the gold price has still not reached a plateau?

Indeed. Over time, the price of gold will rise in proportion to the creation of paper dollars. In an inflationary environment where the demand for protection increases, the price of gold can rise even further. Historically, gold has always been a safe haven against inflation and a safe haven in times of political instability. Today we face both risks.....

wait a minute. maybe paulson should check in with spaulding before he tells these contamacious lies

Dan The Man's picture

...banks have virtually halted lending for home financing because of the lack of clarification on the rules


   I think its more like 'stark raving terror'

PulauHantu29's picture

Buy gold, silver and oil (USO) and you will sleep alot better at night as the dollar loses purchasing power.....Middle East crumbles....and Japan melts away.

As for houses..anyone who buys a house now is an idiot...totally prices will continue dropping for years to come and the average american moves every five you will take yet ANOTHER 10% hit from selling costs.

Mises's picture

USO OIL, or if you have the guts, FOL

AldousHuxley's picture

This proves that hedge fund managers are not worth 2/20.

I know many investors who shorted housing. They now hold gold. So what.


Here are my answers:

  • What is the main threat to the strength of U.S. recovery?

Banks getting in the way of asset price discovery of the free market. Government saying "let's save home owners" but they are just helping banks lie through market-to-whatever pricing. Middle class are spending so much money in mortgage debt that they have no money to buy other goods like cars.

  • Have you lowered your expectation of a rebound by 8% to 10% in property prices in 2011?

Property prices will stagnate against inflation for next 15 years, unless we have a facebook dotcom boom 2.0 which government is trying to hard to make it happen.

  • Can we say, however, that Wall Street banks have changed their practices by learning from the crisis?

Nobody has gone to jail. Instead they got rewarded with record high bonuses. Why would anyone change a thing? Bill Clinton married his daughter off to a banker with Goldman Sachs. Clintons and Obamas are actually defending the banks.

  • Do you think the gold price has still not reached a plateau?

Silver has outperformed gold. Energy commodities have outperformed gold.

  • How do you respond to critics on the excessive size of hedge funds?

Critics are not concerned about the size. Just the way the fund managers are taxed at capital gainst of 15% when productive workers are taxed at income of 25-38%.

Bicycle Repairman's picture

I'd say that cuts through a lot of BS.

Urban Redneck's picture

"This proves that hedge fund managers are not worth 2/20."

What portion of his ten-figure paycheck was from salary & FI equity (which comes from the 2/20) and what portion was gains on his own FRNs invested in the funds?

Silver Surfer 1985's picture

Thanks Hux, good stuff! Silver backwardation bitchezzzzz............

velobabe's picture

listen, this guy is as swallow as they come. he bought into aspen, a McMansion on mcclains flats, woody creek colorado. superficial fuck. i think he is right down the road from botox bitch pelosi. these people are bull crap what to B's. (awannabee)

ViewfromUndertheBridge's picture

well that J Paulson is one all around helluva good guy...he has helped companies emerge from bankruptcy and they are stronger now...his buddies on Wall St are ok too, they have learnt to be responsible citizens...his fund is not the biggest so it is not too big...and we were not even at that lunch where we discussed that thing...

the money quote on Obama "with a little hope, there will be changes"...

I am so surprised this interview went under the radar.

TruthInSunshine's picture

Paulson is never going to tell anyone what he's really doing.

Thinking so is beyond naive.

It wouldn't surprise me if he's completely counter-positioned to every statement of position made in this article.

Does anyone here think it would have been wise to have listened to him peddling Abacus as a 'good investment?' (That's a rhetorical question, by the way).

My .02

bruiserND's picture

Just curious Mr Paulson; if gold is reflecting a debasement of the dollar and inflation then when does replacement cost per square foot ever become relevant in any realestate market?


Are the 30 somethings going to live with roommates and parents forever?


PS Alan Greenspan went on Paulsons payroll in January of 2008 just 8 months before Paulsons CDS's kicked in on cherry picked customized CDO's.