Wednesday, August 22, 2007

How ephemisms do not move prediction markets

Christopher Dodd is running for President. He looks presidential, but his policy potential looks weak to me. (For instance, in the last debate, he said he'd levy a carbon tax to reduce energy prices. I'm thinking that even some of the inner city high school students I've taught economics through Junior Achievement know better than that).

Anyhow, Dodd was blitzing CNBC all week after calling Bernanke and Paulson to his office, which he can do as chair of the Senate banking committee. What he can't do is pressure the Fed to change monetary policy, as a legislator (separation of powers). So he mutters "moral
suasion" (to mean the Fed needs to loosen money) and hopes to get a boost to his presidential hopes.

I think the above graph says it all. Despite a boost in trading volume, he still has a 0.2% chance of winning the Democratic nomination in 2008. The feed below is Dodd's meeting post-mortem on CNBC (it's 6 minutes):

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