Investment strategies designed to profit from government intervention in the markets would appear to be mushrooming. The desire of many western political elites to ensure the living standards and general wellbeing of their populaces do not suffer in the wake of the credit crisis is producing some spectacular market distortions that are being seized on by fund managers.

The US administration, for one, has created a home loan bail-out that – unbeknown to the majority of the US public – considerably enriches a number of hedge fund managers. The scheme is based on President Barack Obama’s oft-stated intent to keep house owners in their homes and avoid further unemployment where at all possible. It goes to extraordinary lengths to achieve these aims.