According to Forbes.com’s 2007 list of top TV personalities, in the year between June 2006 and June 2007, talk show host Oprah Winfrey earned over a quarter of a billion dollars, $260 million, precisely, or over $1 million a day.
In a report cited by The New York Times yesterday, Institutional Investor’s Alpha (IIA) magazine ranked the 50 top hedge fund earners of last year. (The incomes on this list are so outrageous that you need to have made at least $210 million to get on it. Were Oprah a fund manager, she’d have ranked 38th.)
At #1, John Paulson, right, 52, of Paulson & Company, utterly nuked his competition by taking home compensation of…hold your breath, people…$3.7 billion.
That’s not his net worth. That’s three billion, seven hundred million dollars in salary.
Put another way, it is the the biggest one-year take by a hedge fund manager in the history of Wall Street.
Or, put even another way, if we take the bold assumption that Mr. Paulson’s work day begins at 4 am ET, when UK markets open, and ends at 6 pm—though he may work much longer or later—this means that last year, he earned an average of over a million dollars an hour.
Even writing that makes me feel morose. There seem to be so many aspects of this man’s great achievement that, based on present U.S. conditions, not to mention world ones, and how oversized his claim is, just make it seem brutally wrong.
But that’s not the worst of it.
How did Mr. Paulson make so much money, so rapidly?
I’ll take the words right out of IIA: “Paulson rocketed to No. 1 in Alpha’s seventh annual survey by shorting the subprime mortgage market.”
In other words, while banks and other institutions were betting on subprimes, he was betting against against them. When the market cratered, he made…I was going to say a windfall, but even that seems inadequate. A “hurricane-fall”? A “Neptunian-1500 mile-an-hour-jet-stream-fall“?
Even the IIA, avoiding the quasi-neutral, “all-excess-is-good” tone typically embraced by Wall Street rags, seems to detect that a line may have been crossed here:
The enormous riches being generated by hedge funds come at a time of extraordinary distress in financial markets, as millions of homeowners face potential foreclosure and the U.S. plunges into recession (see “Market Paranoia”). Undoubtedly, the huge paydays chronicled here are sure to cause a heightened level of envy and resentment toward hedge funds, and will draw additional scrutiny by Washington, which is already weighing whether to increase regulation.
The Times was a tad more direct:
Hedge fund managers have redefined notions of wealth in recent years. And the richest among them are redefining those notions once again.
Their unprecedented and growing affluence underscores the gaping inequality between the millions of Americans facing stagnating wages and rising home foreclosures and an agile financial elite that seems to thrive in good times and bad. Such profits may also prompt more calls for regulation of the industry.
Even on Wall Street, where money is the ultimate measure of success, the size of the winnings makes some uneasy. “There is nothing wrong with it — it’s not illegal,” said William H. Gross, the chief investment officer of the bond fund Pimco. “But it’s ugly.”
All I can say is that when this whole thing collapses, as it ultimately will, there are gonna be a lot of incomprehensibly pissed people, waiting at the bottom for you guys with chains and spiked bats. Peace.