Daniel thinks this picture tells a story that markets don't work. But as Brian points out in a comment at the end, the chart -- which is for the Democratic nomination, not the Iowa primary -- is probably pretty accurate. Nevertheless, I prefer markets where the traders have more exposure to trading mechanisms than the IEM.

Current prices on NH from Tradesports: Kerry below 1-2, Dean 4-1, Edwards 20-1, Field (including Clark) 19-1. Never trade against the tape.

UPDATE (1/22, 10am): Mark Kleiman is providing daily postings to compare Tradesports, IEM and the pools. Daniel still wants to support his argument (see his update), seemingly because the IEM is in Iowa like the caucus. That won't fly: IEM is an international market; I had an account which I have traded from as far away as Indonesia. They don't call it the World Wide Web for nothing, y'know. As well, the stall on the Dean contract in that market comes long before the caucus; on an all-or-nothing option, the price should asymptotically approach $1 on the contract as you approach the date of the event (this explains the wild movements on the NH Primary contracts on Tradesports.) Oh, and as of this morning and that Herald poll, the current Tradesports odds, the Dean contract is trading at $.18 to win $1 (about 9-2), Kerry up to 1-3 ($.72).