Wednesday, November 26, 2008
Instead, you can get from InTrade a "depression contract".
This contract will settle (expire) at 100 ($10.00) if quarterly GDP figures show the US economy has gone into a depression in 2009.That is not an official definition of a depression, not that there is one. What intrigues me is that trading on that contract has been fairly active, much of it in the last 24 hours. The 2008 recession contract -- using the two-consecutive-negative-quarters definition rather than waiting for NBER -- last traded at 95. With the third quarter number revised down yesterday and today's continued weakness in real consumer spending, that looks like pretty easy money. Worth noting: a huge upswing in personal savings, to $260 billion in October versus $110 in September. Remember when personal savings was negative?
The contract will settle (expire) at 0 ($0.00) if quarterly GDP figures DO NOT show the US economy has gone into a depression in 2009.
For expiry purposes a depression is defined as a cumulative decline in GDP of more than 10.0% over four consecutive quarters.
*"no! there's no contraction!" you say? Fine, take the under.