Intrade Sez: 40 Percent Chance Of Depression

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Hey people cheer up! Your Nate Silver, that mathbot you all loved so much until the election was over, has persisted with his math and numbersto this very day. Most of the time he just worries about that whole boring sordid Franken/Coleman mess in Wasilla. But maybe because Depression reporting is such a "hot trend," he has written about what the chances are we will actually enter one of these depression thingums in the near future.


[T]here is a somewhat more precise definition of a depression (although by no means is it one universally agreed upon by economists): that is a 10 percent decline in real GDP over the course of a year or more. This is the definition that the predictions market Intrade uses. And the latest trade at Intrade just put the chances of a depression occurring at some point in 2009 at 40 percent -- or about ten times more likely than the odds that Norm Coleman prevails in his election lawsuit in Minnesota.

But you don't really need to worry about this shockingly high probability of a depression, because Intrade is full of a bunch of charlatans who tend not to try to predict future events so much as predict what other people predict future events will be. Thus, they are all betting on their fellow bettors getting more pessimistic going forward. Which is a safe bet, knowing what pansies those Intrade jokers are.

Another way of looking at this is to say that Nate Silver has successfully averted a depression with his mind.

What Are the Chances of a Depression? [FiveThirtyEight.com]

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