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Paulson says worst still to come
 
  Hedgeweb - THU, JUN 19 2008
News John Paulson, the US hedge fund manager said at a conference in Monaco that it was too early to look for bargains in the financial sector and predicted the worst was yet to come for the UK housing market.

Mr Paulson said financial companies could wind up losing as much as $1,300bn in the credit crisis.

This is far more than the $945bn in losses predicted by the International Monetary Fund or the $380bn in write-downs already reported by banks.

He said that he was preparing to switch to long positions on distressed mortgages and banks, but added that such a change could be months ?? or even a couple of years ?? away.

The housing market shows no signs of stabilising and the problems will spread to other areas, including non-residential construction and consumer spending, according to Mr Paulson.

He said he was worried about the UK housing market, which he believes was more overvalued at the peak than the US market.

He was also pessimistic about the prospects for credit insurers such as Ambac and MBIA and about US government-sponsored housing financiers such as Fannie Mae and Freddie Mac.

Mr Paulson said he believes the Federal Reserve and other central banks will prevent leading financial companies from failing, but adds that these efforts would only protect holders of debt, not investors in shares.

 
 
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