Recovering from The Beltway Bailout

Like the Secretary of the Treasury, the President, and the House leadership, we are also licking our wounds from yesterday's calamity in Congress.

Clearly, Politickr wasn't the only one to bet big on the rescue bill. 

If you, too, failed to bail out on your Intrade bailout contracts before the collapse, here's what you can do to get back on your feet:

Buy Barack - If you're still holding out, it's time to get on board the Barack bandwagon before this week's Palin-Biden debate. With Palin's political stock now plunging faster than financials on Wall Street, and with every sentence she utters provoking similar shudders, Barack obviously stands to benefit. Although he is currently overpriced at nearly 63 on Intrade, there's no telling how high he could go if the much-harried hockey mom has another cringe-inducing night. 

Short Palin - The above notwithstanding, we still think it's unlikely the McCain campaign will follow Fareed Zakaria's advice and throw Palin under the bus, even if the wheels are nearly off the Straight Talk Express. Then again, after a string of uneven weeks and downright dismal poll numbers for the Republican ticket, Steve Schmidt, McCain's head political strategist, could call for a new distraction. Bank on Palin to stay in place, but don't forget this is a campaign prone to suspending itself.

Buy Democrats to Hold the House - The contract, which is currently trading at around 94, is a good way to balance out riskier investments. After all, if the Democrats don't manage to hold the House this year, all bets are off.

Short Biden to be Withdrawn - Even though die-hard Hillary supporters still maintain there's no way they'll support Obama, don't look for the Demoncratic nominee to placate the PUMAS with a last-minute VP switch. The Biden-t0-be-Withdrawn contract is only selling around 5.5, but shorting it is a sure way to make money in these uncertain times.

 

   

   

Buy Wall St. Bailout Contracts Now

There's one obvious way Main Street can benefit from the unprecedented Wall Street bailout - by buying bundles of stock in the impending Congressional approval of the rescue plan.

While you were sleeping, Speaker Pelosi and Secretary Paulson emerged to announce that they'd ironed out a tentative deal. 

As of this writing, the contract on Intrade for Congressional approval of the bailout is selling at 86, suggesting that traders are still asleep at the switch. As a result, there's easy money to be made for early risers.

Sure, Politickr admits that it's entirely possible Congressional Republicans could once again scuttle the deal. The chance, however, that this bailout breakthrough will collapse is remote since the word from Washington is that both parties are now on board.

Bottom Line - There's clearly something ironic about buying stock in the biggest Wall Street collapse since the Great Depression, but it's far less risky than actually buying stock on Wall Street these days. With Congressional approval seemingly imminent (certainly by Monday), it's an opportunity you can't afford to miss.