Commenting from the GAIM International 2008 conference in Monaco, last year's biggest sub-prime carnage winner who claimed the crown as highest paid hedge fund manager with a cut estimated by Alpha Magazine at $3.7 billion, Paulson & Co's John Paulson still thinks there's more downside in the financial sector. He remains short financial stocks on the belief that they'll have to raise more capital and is long CDS on those companies. And he, like many others, sees opportunities in distressed. Reuters quoted Paulson:
"I don't think we're through the credit crisis. There are lots of problems out there, and I think we'll continue to experience problems for the remainder of the year."
"I believe we're going to go into recession, I think the second half (of the year) will be worse than the first half, and I think the recession will last into 2009 ... The primary factor leading to recession will be a decline in consumer spending, and I believe that will be more pronounced in the coming months."
"I do think, long-term, distressed presents an opportunity that is as much as $10 trillion. That is a reflection of how much the credit markets were overvalued on the upside."
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