The Banter on the Beltway
Analyzing the latest from Capitol Hill.
As I've said, government intervention -- at this point -- is like the Iraq war. You may not have agreed with the initial occupation but a sudden pullout will have profound consequences. So here we are, in a world where the government is inextricably linked to big business and, through the inevitable regulation that will follow, vice versa.
It's a huge game of chicken, with cumulative imbalances on one side and socialization on the other. That's the trade, one way or the other, for better or for worse.
Also of note was the comments by Jamie Dimon of JP Morgan Chase (JPM), who offered that JPM was the only firm in a position to help Bear Stearns (with the implicit guarantee of the Fed, of course). I would assume he means other than Bank of America (BAC), which was also in a position of power before it "chose" to rescue Countrywide (CFC). I have little doubt that they also got the call, albeit one we weren't privy too.
How do you trade this? Carefully. What's clear to me is that there is a massive agenda. What's also clear is that the Fed is running out of rescue vehicles in the private sector. It still has ammunition -- including but not limited to a massive mortgage trust -- so two-sided risk not only remains, it remains so on a grand scale.
See both sides, and manage risk accordingly.
Check out Toddo's interview this morning on Tech-Ticker, discussing the shrinking divide between Washington and Wall Street.
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at email@example.com.
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