Libertarian reflections on the Sopranos

The final episode really brought home to me how the coercive power of the government is not that far off from the power of the Mafia. Before I get into that, I found it interesting that the HBO franchise saw fit to portray "made" guys as part of the war against terror (in my limited reading, libertarian thought usually comes up silent or isolationist on foreign policy, simply assuming a stablized nation state in which one may focus on the reduction of government meddling).

Anyways, Agent Dwight Harris (played by the versatile and gifted Matt Servitto) is a compelling reflection of Tony Soprano, in all the same basic ways:

+ quid pro quo on inside information to help one's personal interests
+ common fundamentalist muslim enemy (due to similar xenophobia?)
+ maintaining a mistress on the side
+ gambling--the FBI unit seemed to have a pool on which mafia executive would get hit next

I maitain that free and unfettered prediction markets can bring a little more clarity and accountability to government behavior. While I am a big supporter and advocate of democracy, it has its limits. One big noise factor is special interests having too much influence--hard working parents taking care of their kids and elderly parents are too busy to lend their voice to counterbalancing fringe interests' lobbying.

An example from the last decade was government spending on AIDS, cancer and heart disease. AIDS spending equaled cancer + heart spending, even though the latter two killers claimed 36 times the victims of the former. While I think a reasonable case could be made to prioritize AIDS research, since it was an emergent and therefore more uncertain disease, I think it also shows that special interests of a 2% demographic minority are able to hijack a conversation that leads to uneven government behavior.

Now if a prediction market could be set up to predict fatalities of every kind--disease, traffic accidents, war, etc--there would be a much less emotional and biased, and much more logical and objective indicator on the cause of death, to which the government could respond to and from which the press might derive more insight and intelligent questioning of the government.

I continue to maintain that prediction markets will improve democratic capitalism from our current implementation. To quote Tony Soprano's jukebox preference: Don't Stop Believin' (by Journey).

UPDATE: Arnold Kling has an excellent essay on those in the war over capitalism, dating back to the early Greeks.

Cav covers Simon & Garfunkel

Commenting on Tom W. Bell's post on CFTC regulation of prediction markets.

How is that hearing going, Barney Frank?
Our markets turn their potential to you, whoo hoo hoo

What’s that you say, CFTC
A government agency must find something newsworthy to do, true true true

{Fade out with some winsome guitar plucking, with a “goo goo g’joob” thrown in for good measure …}

The poor are relatively rich in the U.S.

World GDP per capita is about $7,000 per year. But in the U.S. it is about $43,000 per year. A single person household in the U.S. is considered poverty if their income is $9,000 or less.

Now, the excellent Steve Conover shows how the lowest household income quintile actually receives over $20,000 in government services (there are 3 people in an average household). So if you are in the lowest quintile in household income, you receive average of world GDP.

Why would a politician want to change this arrangement? Like Conover says, if it ain't broke, don't fix it!

Hear that, John Edwards?

Ron Paul getting traction

For Ron Paul fans (like Chris Masse), I can honestly shout, "Ron Paul has increased 750% in value over the last couple of weeks!"

For those who don't pay much attention to CNN polls on Ron Paul, I can say that I am not short PAUL contracts yet. But I've got some offers out there. Come and take them, please.

Most prediction markets advocates seem to be libertarian

You know, please stay out of my bedroom and out of my wallet. Thanks.

But for those who believe the government can solve societal imperfections, enforcing rules in bedrooms and wallets seems like a good thing. Tom Bell has a great article on how government, since it is monopolistic and coercive by definition, can naturally grow bigger.

So much for rights and freedoms.

UPDATE: From the WSJ op-ed page, that quotes back to 1951:

We believe in the individual, in his wisdom and his decency. We oppose all infringements on individual rights, whether they stem from attempts at private monopoly, labor union monopoly or from an overgrowing government. People will say we are conservative or even reactionary. We are not much interested in labels but if we were to choose one, we would say we are radical.

Nice.

Huckabee as VP? Catch up with me fellas

Huckabee is getting talk over the past couple days of getting the VP nomination, specifically here and a little here.

I just happened to say the same thing on May 15 (the night of the second debate)


alt="Price for 2008 Republican Vice-Pres Nominee(Others on Request) at intrade.com"
title="Price for 2008 Republican Vice-Pres Nominee(Others on Request) at intrade.com" border="0">


A paltry 10 contracts traded, be ahead of the game.

The best presidential Intrade color commentary

Alex Forshaw. Fo' sho!

I read about him awhile ago in the WSJ; now I see him from time to time at Midas Oracle.

UPDATE: We've even clashed comments around Pascal's Wager.

Cancer drugs bankrupting the country? Give me a break!

Dubner, quoting Arthur Levinson, Genentech founder:

Look at how much society is investing in cancer. In the absence of better care, 42% of everybody out there is going to get cancer. And half of those 42% are going to die of cancer. It’s the leading cause of death among Americans under age 85. So how much are we spending on drugs for cancer? We have a $12 trillion GDP [gross domestic product]. And we’re spending $15 billion. If I do that math, 1/800th of GDP for the leading cause of death. And people say cancer drugs are bankrupting America! Give me a break.

1/800th seems about right to me. I'd rather spend my money throughout my life, not mostly at the very end of it. And households continue to make gains in buying power (except for healthcare and education, which are coincidentally the most heavily government subsidized sectors).

UPDATE: I just saw a nice graph by Steve Conover (almost all of his visualizations are awesome); this one on job creation. Guess which sectors saw the most net new jobs created?

Kling on presidential candidates and intellectual arrogance

Is intellectual arrogance an asset or liability with irrational voters?

And who is the intellectually most humble? I'm not sure it's any of these folks, not even Ron Paul. Fred Thompson, perhaps?

It reminds me of Plato on power, those desiring it the least deserving it the most.

John Stossel is great

Here is his simple-yet-articulate style, on trade. (Thanks to Don Boudreaux).

How many times have you paid $1 for a cup of coffee and after the clerk said, "thank you," you responded, "thank you"? There's a wealth of economics wisdom in the weird double thank-you moment. Why does it happen? Because you want the coffee more than the buck, and the store wants the buck more than the coffee. Both of you win.

Economists have long understood that two people trade because each wants what the other has more than what he already has. In their respective eyes, the things traded are unequal in value. But this means each comes out ahead, having given up something he wants less for something he wants more. It's just not true that one gains and the other loses. If that were the case, the loser wouldn't have traded. It's win-win, or as economists would say, positive-sum.

...

That's why I worry when I hear politicians say things like, "I believe in free trade, but it has to be fair trade". That particular quote is from a presidential contender, Mike Huckabee, former governor of Arkansas.

Now if we could only legalize prediction markets and list some GISS-spot global warming contracts, I will be giddy. Spread the word, folks!

US Voting Likelihoods

Courtesy of Steven Dubner.

High likelihoods: Blacks, Catholics, Jews & Women

Low likelihoods: Atheists & Homosexuals

Mankiw takes a step towards deregulating prediction exchanges

By giving us a link to an excellent link to prediction markets advocate Justin Wolfers.

Hope springs eternal. Here was my first post on Mankiw; I've emailed with him, and he seems to be a really great guy.

New Intrade Contract: Bloomberg as Independent for President

At Intrade:

The Exchange has listed a contract on Michael Bloomberg (Mayor of New York) announcing his intention to seek the Presidency of the United States in 2008 as an independent candidate. This contract can be found under Politics -- 2008 US Election -- Michael Bloomberg to run as Independent. This contract will settle (expire) at 100 ($10.00) if Michael Bloomberg (Mayor of New York) announces his intention to run for President of the United States in 2008 as an Independent candidate. The contract will settle (expire) at 0 ($0.00) if he does not make such an announcement. Expiry will be based on official and public announcements made by Michael Bloomberg and as reported in three independent and reliable media sources. Due to the nature of this contract please also see Contract Rule 1.9 Unforeseen Circumstances. The Exchange reserves the right to invoke Contract Rule 1.8 (Time Protection) if deemed appropriate. Any changes to the result after the contract has expired will not be taken into account - Exchange Rule 1.4 Please contact the exchange by emailing help@intrade.com if you have any questions regarding this contract before you place a trade.

I've traded this a little bit, but am currently flat.

Great article on how (yet again) prediction markets more accurate than "experts"

From NewsFutures, by way of Midas Oracle.:

After the debate, the pundits were all agreed that Royal had scored some points, and even die-hard Sarkozy fans openly worried that Royal had bested their champion. The next morning, newspapers and radio stations still conveyed the impression that Royal’s performance had probably helped her. However, the trading pattern one could observe on NewsFutures and other prediction markets told a different story altogether. The price of Sarkozy’s contract actually rose a little during the debate and just after, as evidenced in the chart at left. The next morning, this gain held, even as political pundits on the radio stations were still praising Royal’s performance. The disconnect continued until the afternoon, when the results of a poll taken just after the debate showed that it was Sarkozy that had come out on top, confirming the market’s impression.

So, once again, prediction markets performed quite well in an electoral context. This, of course, won’t come as a big surprise to anyone familiar with the field.

Greg Mankiw ponders Intrade arb on Dem POTUS candidates

Alerted by one of his readers, Mankiw asks:

Here is an apparent arbitrage:

Sell Clinton (bid is now 38.3), Obama (16.5), Gore (7.3), and Edwards (3.6) for a total of 65.7. Buy a contract for a generic Democratic win (ask is now 56.8). You pocket the difference (65.7-56.8=8.9). You have to pay out on the first contract if one of these four candidates wins, but in that case you are covered by the second contract. The only contingency in which you lose is if Clinton, Obama, Gore, or Edwards end up president as an independent or Republican candidate, which seems completely unlikely.

So why am I giving away this arbitrage opportunity for free? I must be either unsure of my analysis, or motivated by the search for truth rather than money. Your call.

At the time of my post, the commenter jck says:

"If a named individual from this group, 2008 US Presidential Election Winning Individual, receives his/her political party nomination, the named individual contract listed in this group will be merged into the relevant political party contract in the contract group named 2008 US Presidential Election Winner (Political Party).
E.g. if the Democratic Party nominates Hillary Clinton as their candidate for the 2008 presidential election, all Open Interest (member open positions, not open orders) in the contract 2008.PRESIDENT.CLINTON(H) will be merged into the Democrats to Win contract in the contract group titled 2008 US Presidential Election Winner (Political Party)."
Therefore if you are short H.CLINTON and long "Dem to Win" your positions self-cancel.
For the nominee issue,I mean that it is possible for the initial nominee to be different than the final one,without being morbid for exemple:accidents happen,scandals happen etc...in that case the merging will not be reversed according to the rules and another candidate would be nominated who will also be subject to the merging rule except this time you do not have a long position in "Dems to Win",so you are no longer in an arb situation but a speculative short.
Another rule than can create havoc with this arb is in the notes:"In the unlikely event of the untimely death of one of the named individuals, all trades will be unwound and fees reimbursed to members accounts. (This only applies to contracts that have not been merged with a Political Party contract)."
This means that you won't get the proceeds of a short position on a non-nominated individual if he doesn't survive past the election results.To be sure we are talking long shots but in risk arbitrage one should try to anticipate most possibilities and read the rules carefully to see how they will be handled...This arb is fairly priced given transaction costs and cost of money,and i wouldn't do it for that reason.

jck sounds like someone who makes money at Intrade/TS. Not a rare breed, but not common, either.

Wa wa waaaa....Edwards sliding fast

Whatever mojo Edwards had after announcing his wife's breast cancer has u-turned and heading south quickly. The headlines haven't been too kind to him as his message and lifestyle appear to be clashing. Today's revelation that he may have a take in the $500 million pirate bounty found in a shipwreck recently can't help.

(Note from Cav: ITYS, back on May 10).

Recession Contracts could be going to zero

Oh no, the WSJ reports that poor people doing a lot better (subscription required):

It's been a rough week for John Edwards, and now comes more bad news for his "two Americas" campaign theme. A new study by the Congressional Budget Office says the poor have been getting less poor. On average, CBO found that low-wage households with children had incomes after inflation that were more than one-third higher in 2005 than in 1991.

The CBO results don't fit the prevailing media stereotype of the U.S. economy as a richer take all affair -- which may explain why you haven't read about them. Among all families with children, the poorest fifth had the fastest overall earnings growth over the 15 years measured. (See the nearby chart.) The poorest even had higher earnings growth than the richest 20%. The earnings of these poor households are about 80% higher today than in the early 1990s.

The report also rebuts the claim, fashionable in some precincts on CNN, that the middle class is losing ground. The median family with children saw an 18% rise in earnings from the early 1990s through 2005. That's $8,500 more purchasing power after inflation. The wealthiest fifth made a 55% gain in earnings, but the key point is that every class saw significant gains in income.

There's a lot of income mobility in America, so comparing poor families today with the poor families of 10 years ago can be misleading because they're not the same families. Every year hundreds of thousands of new immigrants and the young enter the workforce at "poor" income levels. But the CBO study found that, with the exception of chronically poor families who have no breadwinner, low-income job holders are climbing the income ladder.

When CBO examined surveys of the same poor families over a two year period, 2001-2003, it found that "the average income for those households increased by nearly 45%." That's especially impressive considering that those were two of the weakest years for economic growth across the 15 years of the larger study.

It doesn't look like we will see the 2 successive quarterly declines in real GDP this year. Although I am expecting the next GDP reports to underwhelm, given the retail cooling that we have seen.

UPDATE: Alan Greenspan talking up the recession. Who is smarter, the prediction market or the ex-Fed Chair?

"After two years in Washington, I often long for the realism and sincerity of Hollywood"

Fred Thompson said that, by way of Steve Bainbridge. Somebody took out all the buy stops UP TO 50! (Which took out most of my long).

Dubner's Trifecta

Steve Dubner says:

For U.S. President:

Hillary Clinton (D-NY)

Rudolph Giuliani (R-NY)

Michael Bloomberg (I-NY)

My Solution for the Removal of Nuclear Waste

Option 1): Launch into outerspace

OR

Option 2): Launch the waste into the Sun (this would alleviate any fears of alien retaliation millions of years from now)

Sounds like a Prediction Market

"If no one has even one percent of all the knowledge in a society, then it is crucial that the other 99 percent of knowledge -- scattered in tiny and individually unimpressive amounts among the population at large -- be allowed the freedom to be used in working out mutual accommodations among the people themselves.

These innumerable mutual interactions are what bring the other 99 percent of knowledge into play -- and generate new knowledge.

That is why free markets, judicial restraint, and reliance on decisions and traditions growing out of the experiences of the many -- rather than the groupthink of the elite few -- are so important."

Read more Here

Deadissue debates passionately with me

We don't agree on some things, but he seems to have the cajones of his convictions. Here is one little discussion we are having on Dobson v Gore, global warming, and the coercive government on his blog:

1. caveat bettor says:
   

   Dobson is a big government Keynesian who wants the government to coerce people to behave according to his enlightened agenda. Sounds like Al Gore to me (just a different agenda).

   Anyways, liberty is always desirable next to death. Come over to the Light, Al!

   May 15th, 2007 at 1:29 pm
2. Al Swearengen says:
   

   Al Gore wants to curb the amount of carbon released into the atmosphere, and he’s on par with a guy who makes money off of parents wanting to make their kids ‘not gay’?

   ...

   Al Gore is not comparable to James Dobson. Keynesian economic theory doesn’t jive at all with our economic policy of the 90s! I can understand how someone would characterize Dobson as Keynesian, but to label any deviation from laissez-faire capitalism as something to the opposite extreme is something I notice a lot of from the right-wing economists out there who tend to get their voice into print more often than others.

   ...
3. caveat bettor says:
   

   Al, you are the passionate wordsmith, and you have my respect.

   Both Gore’s position on carbon and Dobson’s position on gays requires faith, at least from where I observe things. And both of them want to use the coercive power of government to get their way. Therein the equivalence, at least in my feeble mind.

   May 15th, 2007 at 5:12 pm
4. Al Swearengen says:
   

   With “a chunk of ice the size of California melting off of Antarctica” today - I’d suggest that the question of faith in regards to global warming is with the side that says it isn’t happening.

   The difference between someone using government to limit the rights of gays and someone using government to deal with an environmental problem is enormous.

   ...

   The interest of Exxon’s money is well within its rights to publish anti-science literature to temper the government’s will to act on something that will effect the bottom line, but Swearengen the investor and Swearengen the citizen are two different beasts entirely…and while I’d be the first to peg a buy price on Exxon stock if I thought the commodities market was in for an upswing in pricing, I’d also sell that stock without the slightest bit of ill-will felt towards the governments that took the initiative to form a policy to tax carbon emissions.

   There are millions of choices out there to build an investment strategy around. If regulation is going to have an adverse effect on one sector, then it’s time to get out of that sector and figure out something else. Much better to have legislation pass that forces a 2% drop in value of the stock you had to sell, than for 100% of the value to drop when oversight and regulation is lax or non existent (Enron)!

   Or as they say in Baltimore…”It’s all in the game”

   May 15th, 2007 at 9:36 pm
5. Al Swearengen says:
   

   And caveat - thanks for the kind words! I enjoy reading your blog a great deal - - - unique is a rare quality to find in the blogsphere, but your site fits that description, without a doubt.

   May 15th, 2007 at 9:45 pm
6. caveat bettor says:
   

   Al, I concede that there are more recorded instances of ice melting than ice thickening (I haven’t surveyed comprehensively, but I do know of evidence that parts of Greenland and Antarctica have thicker ice now than before).

   I follow the Goddard Institute of Space Science data on global temperatures and agree that the earth’s surface is warmer today than 30 years ago. In terms of what actionable items should be implemented now is a more involved question. (For example, see Becker’s treatment on the ridculously low discount rate used by the IPCC, which is a basic denial of time value, here http://www.becker-posner-blog.com/archives/2007/02/global_warming_1.html).

   Al, do you think population replacement is an issue? If so, then shouldn’t all people who are reproductively capable be regulated into birthing and rearing their 2.1 children, as population replacement dictates? Including gays? Just wondering.

   I think that population replacement is a bigger problem than global warming, in terms of the science. The former is certainly more falsifiable than the latter, with respect to Karl Popper.

   So, if we should regulate carbon emissions to some degree, it logically follows that we should regulate population replacement to a greater degree.

   What am I missing here?

The human time constant

Over at BritannicaBlog, a spark of realization that prediction markets might be a good thing, after all. Welcome to the party!

This reminds me of a technology consultant that worked with me, who always cited "the human time constant" for reasons why it took so long for people to arrive at the good and obvious decisions.

At this rate, prediction markets will be fully legal and liquid by the time my grandkids arrive (and my kids aren't even in middle school yet).

UPDATE: Oh, I just noticed that it’s good ole Bryan Caplan writing.

Jim Geraghty pretty much sums up my thoughts...

on the debate


My thoughts:

Paul- I don't even know why you run as a republican and not as a libertarian/independent.
Romney- I want to believe him but I just can't, too slick.
Guliani- ups and downs; strongly disagree with him on abortion (think huckabee framed debate very well); bitch-slapped ron paul
McCain- decent performance; disagree on the torture issue (nation-states think about the Geneva convention, terrorists don't); stuck to his positions
Hunter- impressed me at times; but just wont win it
Brownback- im a religious conservative too; but i am not voting for him
Gilmore- dont really remember
Thompson- is he from wisconsin or something?
Huckabee- i like him; hes personable; reminds me a little bit of John Edwards in presentation/looks; I've seen him speak in person as well; likeable (possible VP choice)

My Conclusion:
Don't really care for another debate until august/september or so; lets throw guliani, mccain, romney, fred thompson, and gingrich in to see what comes out of it.

Gawker on the 2008 presidential candidates

Funny stuff.

Obama drops the auto industry. Does he lose the UAW?

Barack Obama talks tough to the U.S. auto industry. Is it courageous or foolhardy--conventional wisdom holds that the Dems need the unions, not so much for their donations, but for their grassroots manpower and high voting turnout. But Obama, who has some free trade sentiment in past elections, is not sticking with the tried and true. Kevin Naughton reports:

"Sen. Obama embarrassed himself in Detroit with his lack of understanding of the problems facing the automobile industry, and what it will really take to fix them," the conservative-leaning Detroit News said in an editorial beside a political cartoon mocking Obama for criticizing a Detroit SUV that turns out to be a Toyota Land Cruiser. During his speech, the auto execs in the crowd—and there were many—began muttering that he didn't know what he was talking about. (One factual gaffe getting a lot of traction is Obama's assertion that Japanese cars average 45mpg, when the actual mileage is closer 30mpg). "It was definitely uncomfortable," says Eric Foster, a Detroit political consultant who sat near tables full of auto execs. "The mood lightened when he took on the oil industry."

Obama had barely left Detroit's Cobo Hall before lobbyists for the automakers and the United Auto Workers began churning out stats to counter his argument. From the UAW: the jobs of 17,000 workers will be put at risk by Obama's proposal to require a 4 percent annual increase in gas mileage (a suggestion, by the way, first made by President Bush). From Chrysler: Obama's offer of $7 billion to help with the automaker's health-care costs translates to $29 per car, compared to a benefits burden of $1,500 per car the U.S. automakers now bear. "Twenty-nine dollars," says Chrysler spokesman Colin McBean, "is really not a lot of help."

Indeed, dismissing Detroit as a relic of the bygone American Century is politically popular just about everywhere at the moment. In fact, Obama didn't even have to leave town to find support on that front. After his speech, he raced off to two fund-raisers in Detroit, including a $2,300-a-plate dinner at Seldom Blues, a hip jazz restaurant atop the General Motors headquarters building along the Detroit River. The restaurant was packed with about 250 people, but the crowd didn't include auto execs, UAW leaders or Mayor Kilpatrick. That might work for now, as Obama attempts to define himself as an independent thinker. But ultimately, like Al Gore, Obama will have to make nice with those he criticized in Motown. Why? For the last four presidential elections, Michigan has gone Blue, unlike most Midwestern states. "In the end, the presidential race is all about electoral votes," says Kilpatrick. "If Michigan is not important to a particular candidate, that's fine. But we've got 18 electoral votes. That's pretty significant." If Obama hopes to win the White House, he might make his next drive through Detroit more of a joy ride.

When Gambling Is Good

I think a distinction between gamblers and traders needs to be made (so I made it here). That said, here is a WSJ op-ed (subscription required) by Hahn & Tetlock:

The crystal balls are called prediction markets or information markets, and they help forecasters, for example by allowing traders to vote with their money on the future unemployment rate or the winner of the next presidential race. If you visit the Iowa Electronic Markets, you can take a financial position on the Democrats' chances of winning the White House in 2008. As this is being written, a contract purchased for $6.15 would yield $10 if a Democrat wins, allowing analysts to infer that the "market" believes the Dems have a 61.5% chance of taking the election.

Some businesses, meanwhile, use internal information markets to predict outcomes of specialized interest. Hewlett Packard asks employees to predict revenues and operating profits, believing the exercise can add useful information to conventional forecasting methods. HP is even pondering the sale of a commercial version of its BRAIN (Behaviorally Robust Aggregation of Information in Networks). Eli Lilly has used these markets to help predict which newly developed chemical entities will become successful drugs. Google has used the approach to forecast product launch dates.

These markets often predict more accurately than experts. Why? They draw on the knowledge of people who might otherwise be ignored. Their anonymity frees participants from pressures to agree with opinion leaders. And they create straightforward profit incentives that encourage participants to search for better information.

Many academics across the political spectrum are excited that prediction markets could improve decision making in a whole host of arenas. Yet regulatory restrictions imposed by federal and state anti-gambling laws make these markets risky to operate. The Iowa market -- deemed by regulators to be a teaching device -- is the only public forum in the United States where the technique can be used with great flexibility, low cost and little fear of government intervention.

But when did politicians actually move the ball forward? They are too busy shaving points for their donors and voters. Points that the silent majority pays for. As usual.

Quote of the day

Atheism not only keeps the guilt, but it also keeps the confusion.

From Douglas Wilson, responding to Christopher Hitchens. Or, as WuzzaDem cleverly nicknames him (scroll to bottom), Xopher Hitchens.

Still No GOD.EXISTS contracts listed. (Nor GLOBAL.WARMING contracts, either--I'm dead serious about those).

Time to short Edwards?

From Tigerhawk, this was pretty amusing and also trade-provoking:

{Edwards} claims he went to work for a hedge fund in "order to learn about the relationships between financial markets and poverty."

Yeah. Hedge funds are full of people who think deeply about the relationship between their business and the distribution of wealth. You know, just like soup kitchens are full of people who understand that volatility is a tradeable asset.

What a maroon.

And a prescient commenter, Charlottevillian, says:

Edwards is done. He has to now cater to the lunatic fringe because its all he has. His "two Americas" meme has been completely discredited by his own absurd life. Between the disclosure of his $400 haircuts funded by his campaign, his massive compound, and now his exploration of poverty through hedge fund management, he has become our own Marie Antoinette. Talk about unforced errors!

I just hope he stays in the race long enough to engage in some real primary debates. That could be fun.

So I went and sold 1 DEM.NOM.EDWARD @ 8. (I am also long some OBAMA, RICHRDSN, and WARNER--the last 2 are underwater).

The limitations of logic (and the need for passion)

In case you need catching up, 2 of the finer prediction market intellects, Steve Levitt and Robin Hanson took different tacks on the economists petition in favor of rolling back restrictions on prediction exchanges.

Levitt wouldn’t sign, and gave his reasons here.

Hanson repudiated with Levitt’s decision with a bit of logic here.

My initial post on this at Caveat Bettor:

Levitt reminds me of Private Trip in Glory: tear it up. Tear it up! TEAR IT UP!!!

To expand a little on this, my thinking on Hanson’s fair and accurate but possibly weak argument is this: logic only holds in a given paradigm. Thus, if the paradigm is shifting, or we very much want it to shift, an illogical response may be more effective. In the film Glory, the Negro regiment was only paid $12 per month, even though they enlisted for $15 and white regiments were paid $15. Private Trip, played in an Oscar-worthy and award-winning way by Denzel Washington, says “we can stop a bullet the same as a white man”, and he encourages his comrades in arms to tear up their paychecks. Logically, Private Jupiter Sharts tells him “Twelve dollars is a lot of money”–economically speaking, these men could take their reduced wages and express them in speech and other markets, increasing their influence.

But no, they tear them up. They inspire their white officers to tear up their pay, too. An inspiring scene in an inspiring movie, that helps to change the world. The all-black regiment from Massachusetts kicks butt, inspires the creation of several more black regiments through the North, and starts a wonderful tradition of african american service and dignity that continues in american history through the world wars and even to today.

I think Levitt, in his own way, is doing the same thing that Private Trip did when he found out about that first paycheck. Good for him!

Cross posted from Midas Oracle.

Senior ESPN writer thinks Patriots should have kept Branch

What?!? This is an exact quote from Jeffri Chadiha's article:

Why didn't the Patriots just pay former wide receiver Deion Branch in the first place? It would've saved them a lot more cash this offseason. It would've given them a better chance at beating Indianapolis in last season's AFC Championship Game.

But Senior ESPN Writer Chadiha never specifies the savings. I beg to differ. This is was my analysis back in April:

Considering Deion Branch is costing the Seahawks $8 mil this year (and $22 mil in the first 3 years of his $38 mil contract), having Randy Moss for $3-5 mil for just this season looks much nicer. That means the Patriots have $12 mil in cap space that they can allocate this season and next, plus the perceived upgrade from Branch to Moss this season. Win now, plus win next season.

Had Chadiha just said "it usually takes more than a year for receiver to learn a new offensive system" instead of making false claims about money, I would not be all over him/her.

C'mon, ESPN, you are demonstrating why big media outlets need to be held accountable by wee blogger fishies like me.

My prediction of Fed Wording

"Inflation pressure appears to be moderating, market may have turned corner in mortgage lending, surprising corporate growth, keep rates steady, forsee lower energy prices"

Probably too many topics but that is what I am seeing. I offered my prediction on the hurricane season and oil prices over at Capitalism and Freedom. Hurricane season has started 3 weeks early unfortunately.

State of the US Economy? Strong.

From today's WSJ editorial (subscription required):

Here's the "surge" you aren't reading about: the continuing flood of tax revenue into the federal Treasury. Tax receipts for April were $70 billion above the same month in 2006, and April 24 marked the single biggest day of tax collections in U.S. history, at $48.7 billion, according to the latest Treasury report.

The April comparison is slightly askew because the IRS processed more returns than usual this year. But there's no denying that Americans are sending more money than ever to Washington; revenues for the first seven months of fiscal 2007 are up 11.3%, or $153 billion. This Beltway bonanza has helped to slash the projected federal budget deficit by more than half from the same point last year. Across the past three Aprils, federal red ink has sunk by nearly $300 billion. The deficit this year could tumble to $150 billion, or an economically trivial 1% of GDP.

This revenue boom certainly casts doubt on the political wails about tax loopholes for the rich. So far this year, the taxes paid on so-called nonwithheld income, which are dollars that don't come from normal wages and salaries, have climbed by nearly 30%. This is income largely derived from capital gains, dividends and other investment sources -- i.e., the tax rates that President Bush cut in 2003. Individual income taxes are also up by 17.5% -- a handsome fiscal dividend from rising wages and low unemployment.

Are recession fears overpriced? Here's the latest pricing from Intrade:

I read the most simple yet brilliant thing by Gary Becker and Kevin Murphy just now

From The Upside of Income Inequality (hat tip Greg Mankiw):

Higher rates of return on capital are a sign of greater productivity in the economy, and that inference is fully applica­ble to human capital as well as to physical capital.

For many, the solution to an increase in inequality is to make the tax structure more progressive—raise taxes on high-income households and reduce taxes on low-income households. While this may sound sensible, it is not. Would these same indi­viduals advocate a tax on going to college and a subsidy for dropping out of high school in response to the increased importance of education? We think not. Yet shifting the tax structure has exactly this effect.

Levitt does not sign economists' petition on prediction markets

Here's why (hat tip Chris Masse).

I've made similar points here, here, here, and here.

Levitt reminds me of Private Trip in Glory: tear it up. Tear it up! TEAR IT UP!!!

The good ole' days, and what of recession?

From the Everyday Economist. And the latest recession pricing at Intrade:

First GOP debate is done: 3 winners and 1 loser

The winners: Romney
McCainFred Thompson

And the loser? Rudy, Rudy ...

Ann Althouse has some wrapup commentary.

Salutations, deadissue

Here's his blog. We both love Barney Frank, but one of us really loathes Jimmy Carter, which makes most of his posts difficult for me to digest--heck, I can just go back to New England where I was born and raised to get reimmersed in the politics of Ted Kennedy.

I think I'm sticking him on my blogoll, anyways. His comments here are just too intelligent not to do so.

Sports Guy plays tribute to his muse

Rest in peace, David:

Through college and grad school, as I was slowly deciding on a career, I read it every year to remind myself how to write -- how to save words, how to construct a sentence, how to tell someone's life story without relying on quotes, how to make anecdotes come alive. It was my own personal writing seminar. ... Every two years, I read that book again to make sure that my writing hasn't slipped too much. Like a golfer visiting his old instructor to check on his swing.

Wow, there really is a journalistic conspiracy

to keep us poor and stupid!

This is the silliness I left at Greg Mankiw's blog just now

Comment 15:

I think that the NBA needs some affirmative action--all asians and latinos should get triple the points for the same scoring, because they are so underrepresented in the league.

Too frazzled with work, I guess.

This Could Change Everything

Sorry for my extended sabbatical but this was worth the wait.

Some potential big news today that Rep. Barney Frank (D, Mass) has apparently proposed what is called the “Internet Gambling Regulation and Enforcement Act of 2007" (cant believe I just posted to an MSN article)

Nothing yet at the National Right for Online Gambling.

Any lawyers out there that can share their opinions? Will TS be able to operate under the conditions proposed? How about a TS contract on this bill passing?

Tony Soprano, poster child for fast burn gamblers

Last night's new episode was called "Chasing It", and displayed Tony's seemingly out-of-control gambling penchant, which coincided with stress with his spouse, his financer, and ultimately in someone's death (don't want to spoil it).

I can't find an early post of mine, which advised folks here not to risk more than 4% of their allocated assets on any single event or contract series. If Tony only had read it. Sorry I can't find the link, but hopefully you've learned something from this.

As a risk manager (as opposed to a noise trader, speculator, or gambler), I don't mind taking other people's money, as they might be a little more irrational about risk than I am. But it doesn't serve the longterm liquidity of these prediction markets well to have people lose their money and interest forever. So remember, keep each play to 4% or less. The more you are a proven winner (a track record of profits doesn't lie), the more you can put at risk.

Race of the tortoise, baby.

Is Randy Moss the tipping point?

The Patriots pretty much took this draft off, looking to build from next year's draft (or later ones). But once they were able to pick up Randy Moss, disgruntled to be in silver & black, the Patriots' 2008 Superbowl contract popped.

(Yes, I am long a few, and was able to take some profit on this move).

UPDATE: Considering Deion Branch is costing the Seahawks $8 mil this year (and $22 mil in the first 3 years of his $38 mil contract), having Randy Moss for $3-5 mil for just this season looks much nicer. That means the Patriots have $12 mil in cap space that they can allocate this season and next, plus the perceived upgrade from Branch to Moss this season. Win now, plus win next season.

Barack continues to gain on Hillary

Some interesting thoughts on Obama's edge because he is black, from John McWhorter at The Economist (hat tip Instapundit). I am long some Obama, Richardson, and Warner (the last position is underwater). An excerpt:

IT is reasonable to surmise that Barack Obama will be the next President.
Mr Obama has a once-in-a-lifetime charisma that Hillary Clinton could never approximate, and she also suffers from the handicap of not being black. For all of his other plusses, part of Mr Obama’s appeal lies in the fact that many whites feel that voting for a black presidential candidate would be Doing the Right Thing. Leon Wieseltier has been explicit about this; he is not unique.

Some object that white voters have often claimed to support black candidates only to refrain from actually pulling the lever for them. But does this unquestionably apply to the Obama case? Are all those swooning whites fighting their way into his appearances racists deep-down, chasing Mr Obama as a rock star but loth to vote for "one of those people" as a President? There are blacks, after all, who have designated Obama "the kind of black they’re comfortable with".

As for Republicans Mr Obama would be up against, assuming that Rudy Giuliani could not get the nomination because of his leftish background, I submit that Mitt Romney lacks the Element X to sway voters on the fence, and would only attract the party faithful. The same would be true of John McCain, looking and acting all of his 70 years. The bloom is off the rose.

It will be intriguing to see what a certain contingent makes of it if we finally have a black president. All rhetoric about America as an apartheid nation, racist to its core, will run up against the fact—which will ironically feel inconvenient to this contingent—that the man who wakes up every morning in the White House and flies on Air Force One is black.

Condoleezza Rice and Colin Powell have not really counted in this regard. Serving a Republican administration renders them to an extent "not really black" in the eyes of many, and neither devotes much effort to "identifying" with the black community. But Mr Obama would be a Democratic president, and with no war blood on his hands.

One person can, after all, be more culturally black than another one. We are trained to roll our eyes and say “What’s that all about?” when this is brought up. But if blackness is about nothing but having a certain amount of pigment, then we seem to have gone back to some assumptions that bring to mind sepia-toned photographs and words like miscegenation.

In an America with increasing numbers of biracials, it’s time to start this conversation, and a President Obama would be a useful kick off.

FT reports fraud in the carbon offset market

Today's Financial Times (via Drudge):

■ Widespread instances of people and organisations buying worthless credits that do not yield any reductions in carbon emissions.

■ Industrial companies profiting from doing very little – or from gaining carbon credits on the basis of efficiency gains from which they have already benefited substantially.

■ Brokers providing services of questionable or no value.

■ A shortage of verification, making it difficult for buyers to assess the true value of carbon credits.

■ Companies and individuals being charged over the odds for the private purchase of European Union carbon permits that have plummeted in value because they do not result in emissions cuts.

Sure wish we had those global warming contracts to talk about.

Any interest in NFL Draft contracts?

I am suspecting not too much. The NFL Draft is really for die hards--quite unlike the interest in, say, March Madness or the Superbowl.

But after reading a great series by Tom Kluck over at ESPN Page 2 (he basically goes through 15 years of first round picks and determines boom or bust based on 5 healthy seasons of play), I had to suggest a First Round Draft Pick series of contracts to Tradesports.

Not holding my breath for this year. Hopefully some global warming contracts get listed, although I am wondering if there is a CFTC ban due to weather derivatives regulation.

My mayor is a dark horse for president?

I heard it from highly placed city official that Bloomberg could make a run. There has been some interest in the contract lately.

UPDATE: I bought 1 contract for 1.4. I am also long Rudy, Fred, Newt, Dick & Jeb. Those last 2 positions are underwater.

My friend Chris Masse alerts me to {drumroll} global warming contracts!

In Forbes:

UBS Investment Bank said it is launching the world's first global warming index based on weather futures contracts for 15 US cities traded on the Chicago Mercantile Exchange.

The contracts compare the average daily temperatures in 15 US cities against a given base, and will eventually be extended to include other major cities around the world.

UBS (nyse: UBS - news - people ) said the index, called the UBS-GWI, will allow investors most affected by the uncertainty of climate change to hedge their exposure to weather and to diversify their portfolios with an alternative asset class.

Here is my comment on Midas Oracle:

15 US Cities!?! I think West Texas Intermediate Crude is a better proxy for global crude prices (WSJ just published an article this week saying it’s not).

Thanks, but no thanks. I find the GISS to be a better proxy than 15 cities in North America. On their website is this brief on their data collection:

The Global Historical Climatology Network (GHCN-Monthly) data base contains historical temperature, precipitation, and pressure data for thousands of land stations worldwide. The period of record varies from station to station, with several thousand extending back to 1950 and several hundred being updated monthly via CLIMAT reports. The data are available without charge through NCDC’s anonymous FTP service.

Both historical and near-real-time GHCN data undergo rigorous quality assurance reviews. These reviews include preprocessing checks on source data, time series checks that identify spurious changes in the mean and variance, spatial comparisons that verify the accuracy of the climatological mean and the seasonal cycle, and neighbor checks that identify outliers from both a serial and a spatial perspective.

GHCN-Monthly is used operationally by NCDC to monitor long-term trends in temperature and precipitation. It has also been employed in several international climate assessments, including the Intergovernmental Panel on Climate Change 4th Assessment Report, the Arctic Climate Impact Assessment, and the “State of the Climate” report published annually by the Bulletin of the American Meteorological Society.

Cough, Cough, Wheeze, Wheeze: It's fodder like this that makes global warming contracts so promising

From Glenn Reynolds:

Laurie David, the producer of "An Inconvenient Truth" and global warming activist, told Texas A&M students to change their "individual behavior" in order to consume fewer resources and to help battle global warming. As an employee of Easterwood Airport, I would like to point out that Mrs. David flew to our campus in a luxurious private jet, which could be seen from 10 miles away due to the thick plume of smog it left in its wake. I am neither denying nor confirming the epidemic of global warming, I am simply pointing out that hypocrites such as Mrs. David don't care about the environment, only their own political agendas. This is proven time and again by these celebrities' and lobbyist's "do as I say, not as I do" attitude.

and

Even worse is David's chic but hypocritical environmentalism at her summer home in Martha's Vineyard. She was issued a "notice of apparent violations" for building a 26-foot-long barbecue station, stone-and-concrete bonfire pit, and outdoor theater on an environmentally sensitive patch of their 14-acre North Road property without the proper permits. They were also cited for tearing up protected vegetation to make way for a lush, sodded lawn, among other crimes against nature.

The commission has since ordered her to remove the offending structures and restore the area to its previous state. All these violations were allegedly done to prepare for a political fundraiser hosted by Robert F. Kennedy, Jr. (another faux Green). Alas, there's no such thing as cheap environmentalism on the Vineyard.

Laurie David has been labeled a "Gulfstream liberal" by Eric Alterman, himself a proud member of the Left and a regular columnist for the Nation. He recognizes that Ms. David's brand of environmentalism is nothing more than a facade, a distraction from the financially secure yet intellectually boring life of the fabulously wealthy. But this hobby has dire consequences for the rest of us.

You can read about Crow's touring carbon footprint here: 3 tractor trailers, 4 buses, 6 cars. Cough, cough, wheeze, wheeze, at least my grave is warmed.

The original story, via Washington Post (hat tip Drudge):

"I am floored by what I just experienced with Karl Rove," David reports. "I went over to him and said, 'I urge you to take a new look at global warming.' He went zero to 100 with me. . . . I've never had anyone be so rude."

Rove's version: "She came over to insult me and she succeeded."

Things got so hot that Crow stepped in to defuse the situation and then got into it with Rove herself. "You work for me," she told the presidential adviser, according to singed bystanders. "No," was his response. "I work for the American people."

News of the dust-up filtered quickly through the room. Some witnesses said David was very aggressive with Rove; a shaken Crow later said that Rove was "combative and unresponsive."

Jobs, jobs, jobs

A couple of interesting posts that continue to assuage recession fears and household uncertainties. First, the WSJ says this (subscription required):

This year the great jobs undercount has continued. An analysis by economists at First Trust Advisors in Chicago has found that from April 2006 through February 2007 (the latest revised numbers available), the federal government originally reported almost one-half million fewer

Americans working than actually were working. On average, the first monthly forecast for this period was 113,000 jobs; the second report from a month later counted 138,000 new jobs; and the final revision was 157,000 jobs. Whoops. So this year, one of every four new jobs flew below the government's statistical radar -- which counts as improvement, we guess.

What's the problem? Well, the Labor Department seems to be using old statistical techniques to measure the dynamics of the new economy. The government publishes two different job estimates. The one that gets big play in the media is the establishment or "payroll" survey -- which asks some 300,000 large employers about their hiring patterns. The second is the smaller household survey, which randomly calls people on the phone and asks whether the adults in the household are working.

For at least the last two years the household survey has been far more accurate. No one knows the precise reason. Former Department of Labor economist Diana Furchtgott-Roth suspects that the survey of big and established employers is failing to account for the huge increase in the number of Americans who are self-employed, contract workers, or work for start-up business ventures that are invisible to Washington.

"We know when Ford lays off 20,000 workers. We don't always detect in our sample the small start-ups, like Joe's Auto Parts, and other entrepreneurial enterprises that define the new economy," says Ms. Furchtgott-Roth. Robert Stein, senior economist at First Trust Advisors, agrees that Labor estimators seem to think "most Americans work in factories and punch time clocks."

These mistakes can have political and policy consequences. An official jobless rate that is higher than the real rate can lead Congress to spend more on jobless benefits, for example, or contribute to protectionist pressure against foreign goods. It can also influence close elections, because the media tend to play up jobs news. In retrospect, we now know that John Kerry's claims of a "jobless recovery" in 2004 were fiction. With the latest revisions, job growth in this expansion has been similar to the pace of the 1990s expansion.

..., the failure to detect nearly 1.5 million jobs -- the equivalent of ignoring every worker in North and South Dakota and Montana -- suggests there may be a problem in the government's statistical methods. And that provides an opportunity for politicians to create mischief and make policy blunders. America is working, even if the DOL's statistics don't always say so.

And from the clear and brilliant Steve Conover:

This chart shows the big picture: how the job churn compares to the total number of jobs in the private sector. Notice the growth trend in total jobs since 2003. The “creative destruction” process is working just as Schumpeter described sixty years ago. Net growth is the result.

Calm seas ahead

Recession sentiment still quite low:

Steve Conover does a great job of cutting through economic scatology. In his latest post, he takes on the inverted yield curve phobia:

Although inversion has historically signaled recession, other indicators are pointing toward sustained growth. In short, I’m still not in the interest-rate forecasting business. However, it is good to see the bellwether 10-year T-note holding reasonably steady, below 5%.

In his previous one, Steve quotes Alan Reynolds to fisk fiscal theorists (perhaps the most popular representative of this camp is Robert Rubin. I respect Rubin for his Wall Street talents, not his macroeconomics):

Fiscal theorists feel no obligation to accept any evidence as refutation of their theories, because fiscal theories can always be created or revised to explain anything that might happen. If the economy slumps, that is because budget deficits crowd out investment. If the economy booms, that is because budget deficits stimulate demand. If the dollar goes up, that is because budget deficits attract foreign investment. If the dollar goes down, that is because budget deficits create fears of inflation. If inflation goes up, that is because budget deficits are inflationary. If inflation goes down, that is because budget deficits are not large enough. The fiscalist answer is always the same; only the questions change.

Taking on Steve Dubner, co-Freakonomics author and blogger

The Freakonomics Team of Stevens Levitt & Dubner are extraordinary. I had the great pleasure of seeing them live, at an offsite hosted by my employer last year.

Dubner is a fantastic writer. But I am not sure he checked in with his other half when it came to this recent post, on Robert Shiller's housing values, adjusted for inflationary effects, which basically tries to demonstrate a scary housing bubble since 1998, where housing has nearly doubled according to his index.

Here is my comment on that post, #17:

One thing that Shiller conveniently left out of this graph is a normalization for the increase of income and/or wealth since 1880. Real GDP per capita has jumped over 8 times* in the last 120 years. Applying that to the roller coaster would peg housing values to be 24% of real GDP per capita at the 1880 level.

Yes, we spend 2 times on housing what folks in 1880 did (forgetting, for a moment, that we have plumbing & sewage, electricity, heating, air conditioning, digital wiring, fireproofing, sump pumps …) in houses today. But we have 8 times the buying power. Ultimately, housing is deflationary to the consumer.

*http://eh.net/hmit/gdp/gdp_answer.php?CHKrealGDP_percap=on&year1=1890&year2=2005

Chris Masse is losing his nerve when it comes the relevancy of prediction markets on complex questions

He asserts:

#1. The average temperature of the Planet Earth is difficult to get. Think of the difficulty to gather the data from the different points (Virginia, the North Pole, South Africa, the oceans, the French Riviera, the Canadian big lakes, Indonesia, etc.).

#2. The scientists don’t have a perfect global model, yet.

TAKEAWAY: I understand that many traders would believe in “global warming” and buy up such an event derivative, but where would they get advanced indicators on future temperatures?? Past data is not of help if you don’t know how to interpret them. You don’t just buy up a global warming event derivative just because temperatures have risen in the past and that you believe religiously in global warming.

to which I replied:

Uhh, Chris, people buy stuff all the time that is not good for them.

Look at lottery tickets–you put down a dollar to win 30 - 35 cents. First, the lottery masters keep a third of the collection for overhead and public financing. Then they payout the other two-thirds. Then they tax the two-thirds. And remember, that dollar was after-tax money.

People will buy this. If priced aggressively enough, I will sell it.

Our risk models are not perfect, either. Ever hear about LTCM or Amaranth? So don’t hide behind that shrubbery.

When things get difficult, that’s when prediction markets can inject some information. Sure, it won’t be perfect information. But, you and I agree, markets outperform polls when it comes to revealing the truth.

C'mon, Chris, grow another pair (of reasons).

Bmili's all grown up

Check out his new blog! Glad to hear that he will still be sharing his wisdom here as well.

My blog

I have started my own blog called Capitalism & Freedom. I will continue to post here as well.

I believe in global warming contracts, Chris Masse does not

Go visit my good friend over at Midas Oracle. Tell him what you think.

Graph courtesy of the Goddard Institute for Space Studies.

GOD.EXISTS, to be short or long?

Last November, in looking at Bryan Caplan's new book, Myth of the Rational Voter, I mentioned Pascal's Wager in the form of the GOD.EXISTS contract. Chris Masse picked up on it here, and we went a few rounds between us, Jason Ruspini, and Alex Forshaw.

Newsweek recently hosted a debate between Sam Harris, Atheist, and Rick Warren, Biblical Christian. Here is how it ends (again, with a form of Pascal's Wager):

WARREN: Can you have spirituality without a spirit?

HARRIS: You can feel yourself to be one with the universe.

WARREN: OK, then why can't you just take the next step? Because right now you're talking in extremely nonrational terms.

HARRIS: There's nothing irrational about it. You can close your eyes in meditation and lose the sense of your physical body, totally. Many people draw from that the metaphysical conclusion that "I'm just spirit, and I can transcend the body." That's not the only conclusion you have to draw from that experience, and I don't think it's the best conclusion.

WARREN: You're more spiritual than you think. You just don't want a boss. You don't want a God who tells you what to do.

HARRIS: I don't want to pretend to be certain about anything I'm not certain about.

Rick, last thoughts?
WARREN: I believe in both faith and reason. The more we learn about God, the more we understand how magnificent this universe is. There is no contradiction to it. When I look at history, I would disagree with Sam: Christianity has done far more good than bad. Altruism comes out of knowing there is more than this life, that there is a sovereign God, that I am not God. We're both betting. He's betting his life that he's right. I'm betting my life that Jesus was not a liar. When we die, if he's right, I've lost nothing. If I'm right, he's lost everything. I'm not willing to make that gamble.

I am still a buyer of GOD.EXISTS (and SPX, too). The former requires more faith, the latter, more reason. In any case, there are sellers of both, and folks who are long one while short the other. How about you?

No housing bubble

according to Carl Steidtman (hat tip Felix Salmon). Here's what the US.RECESSION.07 contracts are looking like:

Hurricane contracts? Yes!

The Category-3-or-higher by State contracts look interesting. There are Last Named contracts, too, although I'd better read up on hurricane naming conventions. They are listed under the Weather - Seasonal - Hurricane section.

Still, alas, no global warming contracts.

I'm up 145% in TS since March 1, but read the fine print

Thanks to NCAA basketball trading, which I found to be quite liquid over the last month, I was able to trade about 20 championship contracts as well as 2 of the 3 final four games. I never took a position greater than 50 of a single contract, and my margin was never over $1,000. But I think I could have traded 10 times the size without any market impact, given the observed flow.

The 145% is an annualized figure that I used since the March 1 TS/Intrade reorganization. The net return on the account, after fees but including unallocated capital, is 14%. I am not very active in TS--NCAA and golf majors comprise the bulk of my activity, although there is always some NFL and MLB mixed in there.

Now if only we could get the same kind of liquidity around some of the Intrade contracts. I have begged them for global warming contracts, as I think they would draw incredible interest, but to no avail (yet).