3 ms·

It is easy to look at this guy as the bad guy, but really he just observed that the housing markets were in a massive bubble and bet against it.

• byrneseyeview 19y ago
  It is quite hard to imagine how he's a 'bad guy'. Housing was too expensive. If you bought a house because of the hype, you overpaid. He sold short, which depressed prices, which means that people who bought after his trade are better off than if he hadn't made it.
  • eru 19y ago
    I agree with the point you are proving. But I do not think your argument valid - for you could just use your technique to prove the opposite: People who _sold_ after his trade were worse off. I think we need a more complex line of reasoning to justify him being the good guy.
    • byrneseyeview 19y ago
      But people who sold after his trades made a stupid decision -- to buy overpriced mortgages. We'll live in a better world when rational financial decisions are more rewarding, and that won't happen without making folks like Paulson pretty rich. The thing is, you could make the case that a mortgage boom that went on another year would cost the country 1% of GDP in badly-allocated capital (spent on houses nobody wanted to live in and everyone bought to flip). From that perspective, he's earning a commission of less than 1%.
      • eru 19y ago
        Ok, that sounds like a more convincing argument than the original one. Speculators are risking their own money re-aligning badly-allocated capital in the economy and correct prices. If they are right they earn a nice commission.