Man of the Meltdown: How John Paulson Made a Killing on the Housing Crash

Man of the Meltdown
How hedge fund manager John Paulson made billions in the crisis
By Spencer E. Ante

Editor’s Rating:
The Good: A fascinating account of how John Paulson profited big time from the housing meltdown.

The Bad: A times the narrative seems a tad scattered and gossipy.

The Bottom Line: A dramatic and plausible account of one man’s triumph.

The Greatest Trade Ever
By Gregory Zuckerman
Broadway; 293 pp.; $26

The Great Recession of 2009 destroyed trillions in wealth. But a few lucky or shrewd souls profited from this catastrophe. Perhaps the single largest beneficiary was John Paulson, a hedge fund manager who engineered the greatest trade in history, earning his firm $20 billion by betting against the housing market. In 2007, Paulson took home a staggering $4 billion for himself, the largest one-year payout in the annals of finance. That’s more than $10 million a day, if you’re counting.

How Paulson and a handful of contrarian investors pulled off this once-in-a-lifetime coup is the subject of The Greatest Trade Ever by Gregory Zuckerman, a senior writer at the The Wall Street Journal. Paulson has released a statement calling the book a disappointment filled with inaccuracies, which he didn’t specify. But The Greatest Trade Ever comes off as a fascinating and believable counter-narrative to the growing pile of books recounting the disastrous mistakes made by many of the supposedly smartest minds on Wall Street. It is also a surprisingly dramatic work—although not always in an enjoyable way. It is the drama of waiting to see the horrific destruction scene in an apocalyptic movie.

Read the rest of my book review here.

Hedge Fund King John Paulson “Disappointed” By His Bio

One of the most anticipated books of the global financial meltdown just got a bit of public relations problem. The book, The Greatest Trade Ever, written by Wall Street Journal writer Gregory Zuckerman, due to hit bookshelves tomorrow, details the story of hedge fund operator John Paulson’s now legendary trade against the housing market and how he made billions in the process betting against subprime mortgages.

Although the book is based on extensive interviews with Paulson, Paulson is releasing a statement that disses the book, calling it a disappointment. The statement goes on:

“It contains numerous inaccuracies and fails to capture the essence of the credit bubble. The writing style is indicative of a gossip tabloid rather than respected financial journalism. Unfortunately, the opportunity to create a meaningful documentation of an important time in financial history was lost.”

Now, it is not totally surprising that the subject of a book would be disappointed. That is the nature of biography writing. But Paulson’s criticism seems to run deeper, and is even more surprising given that the book is largely laudatory to Paulson, describing how a “renegade” made financial history.

My main problem is that Paulson does not specify the “numerous inaccuracies.” If he is serious about this criticism, he should detail the instances so the writer has a chance to defend his work. Providing further details would also help readers judge whether the alleged inaccuracies are minor mistakes or major lapses in reporting or judgment.

As for the gossip tabloid style, that claim seems to be a bit overstated. I have already read the first 100 pages of the book, and if that is any indication of the tone of the rest of the story, it’s far from coming off like a tabloid, though there are a few parts where Zuckerman seems to throw in some unnecessary details about the personal problems of some characters to spice up the tale. For example, Zuckerman devotes a substantial amount of space chronicling the marital problems of one analyst who worked for Paulson, which didn’t add much to the story.

It will be interesting to see how the publisher and the author react to Paulson’s statement. They can’t be entirely happy about it.