Dean Baker

Guest Post: Will John Paulson Be Wrong This Time?

John Paulson is a billionaire for good reason: he has been right far more than wrong. Yet is his "recovery" bet premature? Does his entire strategy hinge on a bet on housing, which as Bullard, Greenspan and Shiller all say is very precariously balanced on the edge of another leg down. Will Paulson finally be proven wrong, and if so will he be remember for his one wrong bet far more than for the series of right ones?

Econophile's picture

It's hard to ignore the data that is coming out. There is a definite slowing trend in the economy. It supports my forecasts of a slowdown coming in the second half of this year. Expect the data to be its normal uneven trend, but it is clear that the economy is slowing. Here I show you what I'm seeing.

Leo Kolivakis's picture

The Third Depression?

Despite Krugman's poor choice of words, I also worry that policy blunders and this myopic focus on austerity to assuage bond vigilantes will kill any recovery going on right now. And make no mistake, the recovery is gaining traction.

John Paulson - A Credible Defense?

John Paulson, the hedge fund investor behind the toxic CDO
referenced in the S.E.C. complaint, ratcheted up his
nobody-saw-it-coming rhetoric, with a letter nominally addressed to his own investors but clearly intended for a broader audience of ignoramuses and amnesia victims:

"It is easy to forget that before the collapse, the
overwhelming view of investors, ratings agencies and economists was
that the housing market was strong and would continue to get stronger."

The opposite is true. Nobody was saying that the housing
market was strong and would continue to get stronger during the weeks
prior to April 26, 2007, the closing date of Goldman's notorious Abacus 2007-AC1.
There are countless ways to discredit Paulson's statement, just as
there are countless ways to discredit his claim that he operated in "good faith." (As Vanity Fair was kind enough to point out, Paulson's bad faith manipulations were first highlighted here on HuffPo seven months ago.)