Like any person, John Paulson wanted his colleagues to think well of him. After college, he spent time in a number of financial institutions, looking for the niche that he could occupy and make a name for himself. He never found it. By the time he was nearing 50, he found himself managing a small hedge fund organization that did pretty well but did not make headlines. Although generally well-liked, his fellow financiers did not think he was anyone special.
During 2006, Paulson noticed something he couldn’t believe no one else could see: housing and real estate values were climbing much more swiftly than history and economics said was possible. He was certain the market was going to implode, but without a background in housing markets, his opinions were largely ignored, or actually laughed at.
Hindsight plays as much of a role in telling this story as the players do. Gregory Zuckerman was able to interview all of the major figures who were involved in Paulson’s astronomical success in betting that real estate would indeed falter in spectacular fashion.
I do not have a background in any variety of economics or finance, yet I found this an utterly riveting tale, even though at its heart, it is not much more than a slight variation of David and Goliath. I think that in small ways, everyone has thought that so-called “experts” are out of touch with a particular reality, and have felt the frustration of trying to convince them that they are wrong. From that point of view, the story of John Paulson is very exciting.
And yet, he (and the few like-minded investors we also read about) realizes that the kernel of his anticipated trade is, quite simply, unabashed greed on the part of the banking and mortgage industries. These men also understand that for them to lock in the kinds of profits they predict, hundreds of thousands of American households will have to default on their mortgages and lose their homes. From that angle, this story is discouraging, and at times, outright infuriating.
Rated: Moderate. About a dozen moderate profane terms, and a handful of f-bombs.