But was it? Chanos, for one, is tired of the blame-the-shorts litany, and he recalls a conversation with Bear Stearns’ Schwartz to make his point.

The day before the Fed’s rescue of Bear Stearns, Chanos says he was walking to the Post House restaurant in New York City, when, at 6:15 p.m., his cell phone rang. He saw the Bear Stearns exchange come up on his caller I.D. and took the call.

“Jim, hi, it’s Alan Schwartz.”

“Hi, Alan.”

“Well, Jim, we really appreciate your business and your staying with us. I’d like you to think about going on CNBC tomorrow morning, on Squawk Box, and telling everybody you still are a client, you have money on deposit, and everything’s fine.”

“Alan, how do I know everything’s fine? Is everything fine?”

“Jim, we’re going to report record earnings on Monday morning.” 

“Alan, you just made me an insider. I didn’t ask for that information, and I don’t think that’s going to be relevant anyway. Based on what I understand, people are reducing their margin balances with you, and that’s resulting in a funding squeeze.”

“Well, yes, to some extent, but we should be fine.”

“This is now 6:15 on Thursday night, the night before the collapse,” Chanos says. “It was after a meeting with Molinaro”—Bear Stearns C.F.O. Sam Molinaro—“who basically told him at that meeting, ‘We’re done. We’re gone. We need money overnight we don’t have.’  So here he is, calling one of his biggest clients to go on CNBC the next morning to say everything’s fine when clearly it’s not. And he knew it wasn’t.”

Chanos refused to go on CNBC. By 6:30 the next morning, word was out that the Fed was engineering the rescue of Bear Stearns. Chanos realized that he could have been on CNBC while that was ­announced. “I thought, That fucker was going to throw me under the bus no matter what.”

“So here it is,” Chanos says. “Alan Schwartz takes the position ‘Short-sellers were our problem,’ and who did he try to get to vouch for him on the morning of the collapse? The largest short-seller in the world. You want to talk about ethics and who’s telling the truth on these things? It’s unbelievable.”

Schwartz, not surprisingly, has a different version of events. “I did not make the statements attributed to me by Mr. Chanos,” he says through a spokesperson. According to someone who has spoken to Schwartz, the ex-C.E.O.’s side of the story is that the conversation took place on Wednesday, not Thursday, and that it was entirely different from what was related by Chanos. His contentions are that the call was an effort to obtain a public statement from Chanos that “a group of short-sellers out there are trying to take Bear Stearns down” and that no information on Bear’s financial strength was conveyed to Chanos.

Paulson is in his mid-fifties, hair thinning at the top just a bit, with a slight paunch that he fights by jogging in Central Park, a half-block from the 28,000-square-foot Upper East Side townhouse that he bought a few years ago. He is of medium height, medium build, medium disposition. He favors old-fashioned tortoiseshell bifocals and dark-gray suits—none of the forced informality that you find in some hedge fund offices. He speaks fluidly and candidly and is unmoved by critics of his chosen profession. This, after all, is a man whose mind has been set on making vast, historic amounts of money since he was a kid, when he bought candy in bulk and sold individual pieces to his buddies at a profit.

At the beginning of 2008, he says, the general thinking was, No, we’re not going to have a recession; we’re going to have a slowdown. “Then there would be a pickup in the second half of the year. When the second half started looking as bad as the first, the general feeling became, We’re not going to have a pickup; we’ll have a slowdown.”

Paulson is astounded that some optimists continue to expect that somehow the formerly unsinkable economy will remain afloat, at least long enough for the government’s rescue boats to arrive. “Now that we’re in a recession, they’re probably admitting, ‘Okay, we’re in a recession, but it will probably last just two to three quarters.’ So they’re always underestimating the severity of the magnitude,” he says.

Paulson’s own view of the current situation is much darker. He predicts that the recession will last well into 2010 and that unemployment will reach 9 percent, a sharp increase from its current perch just below 7 percent. “We have a long way to go before we reach the bottom,” he says.

Paulson has become a lightning rod not simply because he made money in an awful market, but because of the way he made it. He wagered against subprime securities while everyone else was piling in. He bet that in addition to Lehman Brothers, other banks like Washington Mutual and ­Wachovia were due for a fall.

Long before the financial crisis hit, Paulson, according to one person briefed on the trade, invested $22 million in a credit default swap that eventually paid $1 billion when the federal government opted not to rescue Lehman Brothers. That amounts to a staggering $45.45 for each dollar invested.

John Paulson was born in 1955 in Queens, New York, in a pleasant and somewhat obscure middle-class neighborhood called Beechhurst. His father, Alfred, an accountant who came from a Norwegian family that had settled in Ecuador, rose to become C.F.O. of Ruder & Finn, a public relations agency. But John’s investment-­banking genes seemed to have come from his mother’s father, Arthur Boklan, who, during the crash of 1929, was a banker at a long-since-vanished Wall Street firm. In an interesting parallel with his grandson, he apparently prospered even as the Great Depression dragged the country into misery. In 1930, according to census records, he was able to afford a $220-a-month apartment in the Turin, a stately building that still stands at 93rd Street and Central Park West in Manhattan.