Money man makes a billion from the misery of millions

New York money manager John Paulson made a billion dollars on the money markets in a few months over the summer.

The windfall meant he entered the list of the top 400 wealthiest Americans at number 165 - equal with Oprah Winfrey.

They both have fortunes of £1.25billion.

Last night some analysts criticised Mr Paulson for cashing in on the plight of ordinary Americans.

Others said he was simply a businessman who saw an opportunity and took advantage of it.

"He gambled big," one said.

"If things had gone the other way, he'd be bankrupt now."

Mr Paulson, 51, a former partner in the Bear Stearns international investment bank, runs his own company, the Paulson Hedge Fund.

Such funds are basically huge pots of private money given by wealthy investors to one manager to wheel and deal on the financial markets in the hope of making big profits.

Because they are private, they operate in great secrecy with fewer legal restrictions than other investment funds.

Mr Paulson made the profit by selling credit notes he did not have in the international banking markets at a fixed price at the start of a trading cycle.

Sub-prime is the name given by banks to risky mortgages granted to those with poor credit ratings.

As the sub-prime bubble burst, the value of those debts nose- dived and Mr Paulson was able to buy the credit notes for much less than he'd already sold them.

The same credit squeeze saw thousands of American families having their homes repossessed and a glut of property on the market.

But Mr Paulson's windfall put him in the annual list of wealthiest Americans compiledby the influential business-magazine Forbes.

A minimum of $1.3billion or £650million was needed to qualify for the list, which was published yesterday.

Top of the list for the 14th year running is Microsoft founder Bill Gates, 51, who is worth £29.5billion.

Second, again, is investor Warren Buffett, 77, with a £26billion fortune.

Their wealth grew by £ 3billion each in the past year, says Forbes, which uses an intricate formula to estimate the size of billionaires' bank balances.

Chat-show queen Miss Winfrey, is the second wealthiest woman on the list.

The wealthiest is Abigail Johnson, a senior manager in her father's Fidelity Investment fund.

She is at number 17 on the list with £7.5billion.

Google founders Sergey Brin and Larry Page, both 34, tied for fifth place with an estimated £9.25billion each.