The Bottom Line

Liberal Losses

Wall Street will react violently if the Democrats take over. Act now before the free ride of corporate hegemony ends.

We’ve got plenty of companies in this country that have been burning coal without worry about the environment. We’re the second largest coal producer in the world (after China), so that makes sense. Unless you are an environmentalist. In that case, you want to make coal burn cleanly, which is for the most part a totally uneconomic proposition. Look for outfits like Texas Utilities, which is trying to build eleven coal plants, to get hammered by the Democrats because of the threat of global warming. You won’t want to own Peabody Energy or Arch Coal, either, even though their coal’s moderately “clean.” The only alternative to oil that will be spared will be ethanol, and therefore its patron, Archer Daniels Midland, because you can’t win the Iowa caucuses without backing that ultraexpensive fuel.

Finally, pretty much every combination possible in the M&A world has been blessed if not out-and-out endorsed by a Justice Department that simply doesn’t believe in antitrust anymore. M&A has been the breadwinner for every investment bank, particularly Goldman Sachs and Morgan Stanley. Plus, there are industries that need Justice to continue to look the other way, most notably telecommunications, where Sprint desperately needs to find a buyer, and the media, where Tribune Co. would love to be taken out of its misery. I just can’t see the Democrats allowing Justice to rubber-stamp every combination that comes over the transom.

A Democratic trouncing in the House and Senate won’t mean that all of these scenarios will play out. But almost immediately after any sweep occurs, Wall Street will react violently, because if Congress goes, so goes the White House. How serious is the threat? I’ve scaled back my exposure to all of these areas. These sectors are simply way too dicey even if the chatter grows that the Democrats could do well come November. You should act now before the delicious free ride of corporate hegemony ends, and the Democrats, once again, decide you’ve made too much money in the stock market.

James J. Cramer is co-founder of TheStreet.com. He often buys and sells securities that are the subject of his columns and articles, both before and after they are published, and the positions he takes may change at any time. E-mail: jjcletters@thestreet.com.