Monday, July 21, 2008

2008 Recession Odds Plummet On Intrade to 17.4%

Odds of a 2008 U.S. recession have fallen to 17.4% on, from 70% in mid-April, and from about 33% just a week ago (see chart above, click to enlarge).

See post below of +3% real GDP prediction for second quarter 2008.


At 7/21/2008 6:41 PM, Blogger Unknown said...

I take that as a contrarian indicator

At 7/21/2008 6:46 PM, Anonymous Anonymous said...

Well, there are only 2 quarters left in 2008. Both would have to show negative growth. You'd probably be better off betting on a recession in 2009 (because of the contract rules), even though that price is at 55.

At 7/21/2008 6:51 PM, Anonymous Anonymous said...

Aren't you a believer in free markets? Why would you prefer the phoney-baloney numbers spouted by a self-interested government to the forward looking wisdom of the market?

It seems to me like a whole lot of so called free-market economists turn into government loving socialists when things turn bad.

Bail us out! Tell us how great inflation is, and how growth is so fabulous!

Harpers had an excellent piece on how most of this government stats are completely fraudulent.

If you truly believe in free markets you'd be well advised to read that article.

At 7/22/2008 7:28 AM, Anonymous Anonymous said...

Uh, volume? Predictive markets need more participants, particularly of differing types, including blind investors, trend followers, etc to be able to have enough volume and noise to get a good result. My take is that inTrade is losing that (or maybe never quite got it). That said, if you can get enough people in the game, the predictive markets can be excellent.

At 7/22/2008 4:32 PM, Blogger juandos said...

Hey anon @ 6:51 PM, could you tell me what was supposedly excellent about that Kevin Phillips bit?

Kevin Phillips worked for the the wage & price controls king, Richard Nixon, right?

Didn't a Wall Street Journal editorial once describe Kevin Phillips as a country & western Marxist?

At 7/24/2008 7:10 AM, Anonymous Anonymous said...

There is absolutely no information here due to the ludicrous contract specifications (two consecutive quarters of negative GDP growth, the second of which must occur in 2008). That means (with q1 in the bank as positive, and q2 apparently positive as well) a specific wager on both q3 and q4 coming in negative.

If they had used a sensible definition (something like "the Business Cycle Dating Committee of the NBER establishes a recession that contains at least one month in 2008"), the contract would probably trade for about 80.

At 7/24/2008 12:01 PM, Blogger juandos said...

Hey Professor Mark, the fine folks over at Investor's Business Daily's editorial offices must be reading your posts...

Note this July 23, 2008 4:20 PM PT posting by them...:-)


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