Sorry if posted by others. Hedge fund employs Greenspan as adviser By Stephen Foley in New York Published: 16 January 2008 The hedge fund that has profited most from the bursting of the US housing bubble has hired the man widely blamed for inflating it in the first place: former Federal Reserve chairman Alan Greenspan. Paulson & Co, the New York-based hedge-fund manager whose bets against the US mortgage market earned it $15bn (Â£7.6bn) last year, said yesterday that Mr Greenspan will become an adviser on economic issues and monetary policy. It is the third major advisory role taken by Mr Greenspan since his retirement two years ago. He already works for Deutsche Bank and the bond investment house Pimco, but this latest position is his most eye-catching, considering Mr Greenspan has been blamed for sowing the seeds of the current credit crisis by keeping interest rates too low for too long in the early years of the decade. Inflated house prices in many parts of the US are now coming down sharply and mortgage defaults are rising, sending shockwaves through the financial markets where mortgage derivatives are traded. It was bets against mortgage derivatives that pushed Paulson & Co funds up last year and netted its founder, John Paulson, a personal pay-day of between $3bn and $4bn. His funds are continuing to place bearish bets on other areas of the financial markets, most notably corporate debt, in the expectation of a US recession this year. Mr Greenspan, too, now believes a recession is likely. "Anticipating the direction of the economy, and assessing the potential for and severity of a US recession, are fundamental in formulating investment strategy," Mr Paulson said. "Mr Greenspan's [experience]... gives him a unique perspective from which to help our team." Mr Greenspan's remuneration was not disclosed. The 81-year-old has defended his role in the housing market boom and bust, saying that central bankers have difficulty preventing asset bubbles and must focus on protecting overall economic growth.