An important distinction

It often has seemed, these last few years, that the economy is managed for the benefit of the investment banks. Treasury Secretary Henry Paulson, for example, is an investment banker. But, it's not true. Many of the investment banks were hurt quite badly when the real property scheme started to turn. The economy is run for the benefit of Goldman Sachs, of which Mr. Paulson was formerly CEO. But, Goldman isn't the only institution with curiously good timing.

The subprime trading gains notched by Messrs. Birnbaum and Swenson and their Goldman associates are large by recent Wall Street standards. Traders at Deutsche Bank AG and Morgan Stanley also bet against the subprime-mortgage market this year, but in each case, their gains were essentially wiped out because their firms underestimated how far the markets would fall. New York hedge-fund company Paulson & Co. also turned a considerable profit on the subprime meltdown this year, as did Hayman Capital Partners, a Dallas-based hedge-fund firm, say people familiar with the matter.

Paulson & Co? Ah ... I'm sure there's no relation.