Friday, February 20, 2009

White Houses Disses Nationalization Talk


Update: "White House Says Strongly Believes That Privately Held Bank System is 'Way to Go', " CNBC is reporting.

Well, somebody at the White House understands the dangers of the threat of huge government interventions in the economy.

This should rally the stock market, especially bank stocks, big time.


  1. This should rally the stock market, especially bank stocks, big time.

    Unless they reason that whatever the government says, it will do the opposite.

  2. I don't believe it will rally bank stocks.

    1. People do not believe the keystone cops in the government who change directions daily.
    2. The WAMU seizure and wiping of the bondholders (along with the ban on shorting financials) has caused private capital to avoid banking like the plague. This will last for years...I won't touch them ever.

    3. In sum: Regime Uncertainty

  3. Geez guys,

    I was talking like a trader. Meaning the market would go up that second, which it did.

    You can't make a trade on that kind news for more than an hour (or less). Indeed, after the market went up for about 20 minutes a rumor arose that Wells Fargo was in trouble and started to take the entire market down again.

    As for "regime uncertainty", I think that is a bit of a misleading term. Not all uncertainty would push the market down, it's more "fear of a wave of anti-market activity", in this case the nationalization of major banks.

    For example, if the rumor was that Carlyle Group might put $40 billion into bank stocks with the same "degree" of uncertainty, the market would be up 500 points today.

    Or if Nancy Pelosi was quoted as saying that bank nationalization was a bad idea, this would also, though uncertain as to ts ultimate impact, would rally the market. It's not uncertainty per se, but rather "fear of anti-market activity".