He bet on the credit crisis – and took home $3.7bn last year

Discussion in 'Politics, Religion, Social Issues' started by BoyBach, Apr 17, 2008.

  1. BoyBach macrumors 68040

    BoyBach

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    #1
    - The Independent
     

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  2. Sdashiki macrumors 68040

    Sdashiki

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  3. Killyp macrumors 68040

    Killyp

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  4. mahashel macrumors 6502

    mahashel

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    #4
    No kidding.. or since this guy made veritable buttloads of money on the catastrophe that has seen to it that I cannot sell my house, perhaps he'd like to buy it from me?
    I'd give him a heck of a deal. The mortgage is fixed and current, but thanks to our awesome depression.. erm.. I mean recession.. erm.. I mean DOWNTURN, there's no way to sell the damn thing. grrr...
     
  5. Marble macrumors 6502a

    Marble

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    #5
    Out of curiosity, how do you make money on something like this? It's not like you can go somewhere and say, "I bet $3 mil at 3 mil to one that there's going to be a housing crisis next year," right? It says he "won the bet." Is that a figure of speech? I think it's interesting that a person can profit from something collapsing just as easily as he can profit from something booming.
     
  6. pooky macrumors 6502

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    #6
    Many ways to do this. One common way is to sell short. Can't explain it well myself, check:

    http://en.wikipedia.org/wiki/Short_selling
     
  7. Music_Producer macrumors 68000

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    #7
    You can buy low and sell high.. or sell high and buy low. In this case he probably shorted (or sold) mortgage company stocks or various other funds, etc.

    My favorite is George Soros who made 1 billion pounds in one day by betting on the British pound. The fund he manages rakes in 73% returns on a yearly basis!
     
  8. mcarnes macrumors 68000

    mcarnes

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    #8
    "Buy low, sell high, that's my motto" -- Homer Simpson
     
  9. Henri Gaudier macrumors 6502a

    Henri Gaudier

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    #10
    I can't believe the couple of positive responses to this. As for Soros who someone mentioned too, he bet so heavily against the Rouble he caused it to collapse. There's nothing to admire in destroying a country. Equally when someone powerful bets billions on an outcome just the act of doing it can cause it to happen.

    As for the inequality of such a sum; I read in L'Humanité Dimanche yesterday that with the recent hyper food price increases people are eating mud. See attached pic for the recipe for mud gallettes; mud, salt and vegetable fat.
     

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  10. P-Worm macrumors 68020

    P-Worm

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    #11
    Are you implying that he was a factor in causing the credit crisis? To me that is like saying that the people that bet against the Patriots cost them the Super Bowl.

    P-Worm
     
  11. Henri Gaudier macrumors 6502a

    Henri Gaudier

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    #12
    No not at all. Not up to speed on the whole invitation only hedge funding process. I'm just reacting emotionally to a an offensive distribution of wealth. Money is a controlled substance which means people who can't eat etc are denied access to the limited supply. He's a whizz. Great ... buy him a house wherever and for however much he wants but don't give him billions.
     
  12. asrmatt macrumors regular

    asrmatt

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    #13
    Investors that put their money in hedge funds usually do it as a way to diversify and manage risk. Look at "disaster bonds" as an example (link below), it's not speculation on hurricans and earthquakes, but a form of insurance and risk management.
    Proabably the same investors that had money in this guy's fund had plenty of money in the mortgage market too.


    http://www.iht.com/articles/1997/01/11/mbonds.t_0.php
     
  13. P-Worm macrumors 68020

    P-Worm

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    #14
    I agree that the way things are suck, but that's the way things are. In my mind, the only way to fix the problem is for people with more than they need to give it freely to those in need.

    P-Worm
     
  14. Henri Gaudier macrumors 6502a

    Henri Gaudier

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    #15
    Hello P-Worm - why? Everyone and everything else is regulated by law and not self regulation. I think it's time the super rich were coralled just like everybody else. Hold up an inverse mirror. "What!? You're worth 10 billion and you haven't paid for one cataract operation?" Instant 10 million fine.:)
     
  15. P-Worm macrumors 68020

    P-Worm

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    #16
    Don't you think that taking something from someone just because they have more than enough steps on people's rights? On top of that, history has shown how hard it is to get the rich to do things they don't want to do - that's why I believe they need to be willing to give it.

    P-Worm
     
  16. NomadicTy macrumors regular

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    #17
    Agreed, P-Worm.

    And history have shown that once you let a government control something as basic as what you earned for yourself, they'll find a way to control something else... It never stops at money.

    Think about it this way -- if everyone here have enough money to buy macs, why should the government not confiscate all of them, sell them, buy 10 of those PC's for the poor kids of the world to be redistributed?
     
  17. theBB macrumors 68020

    theBB

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    #18
    If an investor notices that a government or company is manipulating prices (of goods, currency etc), but it seems obvious that the manipulation is not gonna be affordable to do forever, there is nothing illegal about betting that it will not go on forever. Blame the manipulators instead...

    Unfortunately, a lot of these NGOs are very clueless. Just a couple of years ago, they were criticizing Western governments (rightly) that the subsidies they pay to their farmers were reducing the global food prices so much that it was preventing the poor farmers in the Third World from earning a decent living and making these countries dependent on outside aid. Do they want cheap food or do they want high food prices? Answers are not as clear cut as they want you to believe.
     
  18. Felldownthewell macrumors 65816

    Felldownthewell

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    #19
    I don't think Henri is advocating communism or a redistribution of wealth, he is simply pointing out that while this guy can drive 10 fleets of ferraris full of penguins while eating a plate of caviar, there are people eating mud. Did he earn the money? Yes. Is it rightfully his? Of course. Should the government take it away and give it to poor people? No, that isn't fair. Does it make the fact that his income is several million times that of the average person in a third world country any less despicable? No.

    This is not to say that rich people are bad, and neither am I offering a solution, I am simply saying that the vast difference in wealth is disgusting.
     
  19. Music_Producer macrumors 68000

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    #20

    Uh.. what?

    What's your gripe with someone who takes a huge risk, bets on something, and wins? Soros bet heavily against the pound, and won. The pound didn't 'collapse'. Same with the malaysian currency, it dropped after Soros bet against it. So? You're telling me that he destroyed the country? Lol. Be a little mature. He destroyed Russia? Sorry, I just can't stop laughing at your comments.

    With your analogy you imply that this hedge fund trader caused the credit crisis. Instead of having so much angst against traders, you should direct it towards governments who are responsible for poverty. Let's forget the African warlords and corrupt government officials who deprive their people of food and basic essentials, and instead.. let's attack those who make a lot of money on Wall St. :rolleyes:

    Yes, I admire Soros, the guy wasn't born in a rich family.. he used to sell currencies as a kid. It takes a lot of guts to risk 10 billion pounds on one trade.. and to be successful. It takes a lot to have a return of 73% in a year.. I'm a currency trader and I absolutely admire the guy.

    I don't admire governments, I don't admire politicians who make money in corrupt ways. If someone works hard, or is brilliant and earns million as a result of his skills.. surely he deserves it?
     
  20. Henri Gaudier macrumors 6502a

    Henri Gaudier

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    #21
    Oh so many to respond to. Okay just quickly as I'm full of cold. Yes they do have to give their money willingly for a true transformation into an equitable society but until that consciousness develops amongst all - legislation is necessary to recoup a certain percentage back into the nations purse for social well being.

    True about certain NGO's lacking coherent thinking.

    No I'm not advocating communism as it's a set dicipline and I'm too anarchic to advocate replacing one boss for another but I am advocating redistribution. Socialism is almost dead in lots of places but it's positively blooming in comparison to the States in France. It's not something to be ashamed of!:D

    Music Producer - where to start. I suppose with something you'll understand - €€€€€€€€€€€€€€€€€€€££££££££££££££££££££$$$$$$$$$$$$$$$$$$$$$$:p

    No I don't admire elite capitalists. I admire nurses ... or people who find a cat hit by a car and take it to the vet and pay for it's treatment for no other reason that they want it to be well but not money worshippers.

    I didn't mean to say he was solely responsible for destroying Russia but he was a major major player in the collapse of the rouble which lead to the collapse of the Soviet Union. Just writing in a conversational style and not absolutes. But this act was ruinous for many millions of people.

    No I've refuted the credit crisis one before.

    I do hold governments responsible; for not taxing these people as hard as they do the poor.

    The development of poverty and Wall Street cannot be separated. For every "winner" there has to be those "losers" who go without. Hypothetical question; would you be happy if Soros gambled so much that he won all the money in the world? You had nothing and neither did anyone else and you couldn't buy food? Well that's what life is like for a lot of people. "There are trillions and trillions of € $ £ somewhere but no matter what I do .. I have to eats mud galettes." Capitalism does not work for the people. You may be happy to tolerate it 'cos you're okay but no one cannot say it works for the good of all.
     
  21. Malfoy macrumors 6502a

    Malfoy

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    #22


    For him to win all the money in the world, everyone would have had to bet against him. Anyone stupid enough to bet against him on something like that with his track record deserves what they get.

    In your defense I understand what you are saying by important people betting large amounts of money on something can influence its happening. I just don't think what they are betting on is as easily swayed by the fact they are doing it. These guys (Soros and 3.7b guy) bet on very macro level events, and most people can't play at this level so they in turn can't act erradically react to what they are betting on.

    They have laws to prevent people who can cause the type of reaction you are thinking of in place to some degree.

    Example for those who didn't quite get or don't believe what he was saying.

    Bill Gates isn't allowed to just short all his MS stock.(There is a good amount of paperwork and question answering he'd have to do if he tried.) If he was to announce he just sold all his stock. Everyone(by everyone I mean a lot of investors) would assume there was something going on and look to dump their stock. Stock would plunge. Then he would buy low and could possibly more than double that investment. The stock would go back up the moment after he bought it all back(he then just doubled his money again) and would just cause market issues.
     
  22. Abstract macrumors Penryn

    Abstract

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    #23
    I don't understand the point of this thread.

    This is like a kid who just had his first "deep thought" beyond just playing with his friends or watching cartoons, and he has to share it proudly with everyone because everyone must be enlightened!! Then, clouds quickly blanket the sky and raindrops start to fall when he suddenly realizes that his first deep thought, as profound as it was for himself, was not entirely novel, and is indeed an old re-tread of an idea that every single person has had growing up.......dun Dun DUN!


    So is yours. Can't wait to see your name in the papers: "Man With Average Salary Gives All His Money Away." Just post it here when it gets published.
     
  23. BoyBach thread starter macrumors 68040

    BoyBach

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    #24
    Whilst the extremely wealthy Mr Paulson is obviously not to blame for the credit crisis, the system that he 'played' is. Hedge funds not only take a few percent as a management fee, but also take 20 percent of all profits, whilst fronting little or none of the money being invested.

    It's an asymmetrical system that gives potentially vast rewards with almost zero risk for the fund managers. The banks got envious of their peers earning astronomical bonuses and they all got far too clever for their own good.

    I'll have to stop now as the tears that I'm shedding for all these financial whizz-kids that are losing their jobs will damage my keyboard...
     
  24. Pani macrumors member

    Pani

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    #25
    Noble but lost cause!

    Henri, I admire your motives and think your posts make sense, but it is a lost cause. In the U.S., people identify with their oppressors. They hang on to the hope that someday it might be them, despite the impossbile odds.

    I am betting on Hopi prophecy. They believe that when humankind goes against the basic principles of the Universe, (like too mcuh greed and materialism) sociey is bound to collapse. They believe we have had several "worlds," each destroyed by human folly. We are just on the brink of trashing another one!
     

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