Prediction markets, new year edition

For what it’s worth, here’s what the intrade markets are predicting for 2009 (as of 7am ET on 12/29/2008):

  1. GM to announce a merger with another major auto manufacturer: 35%
  2. More than US$25 billion to be injected into the big 3 auto-makers: 60%
  3. Caroline Kennedy to replace Hillary Clinton in the US Senate: 53%
  4. Guantanamo Bay Detention Camp to be closed in 2009: 84%
  5. The US in Recession in 2009: 85%
  6. An air strike against Iran before end of 2009: 21%
  7. US unemployment rate at or above 8% in December 2009: 50%
  8. Robert Mugabe to depart as President of Zimbabwe in 2009: 50%
  9. Slumdog Millionaire to win Academy Award for Best Picture: 52%

Recession is here!

Our good friends at the National Bureau of Economic Research have made it official; the U. S. economy has been in recession since December 2007. For what it’s worth, the US.RECESSION.08 contract is up 5.5 points on this news, with the last trade occurring at 97.4. The contract rules define recession as constituting two consecutive quarters of negative GDP growth, and since this information has yet to be officially released by the government, it is still an actively traded contract.

Since we are nearly 1 year into this recession, this already qualifies as one of the longer recessions since the Great Depression. Apparently the longest one since then occurred 1973-1975 and lasted around 15 months. At this point, it would appear highly likely that we’ll be setting a new record with this recession. The “good” news is that the Intrade US.DEPRESSION.09 contract (which defines depression as a cumulative decline in GDP of more than 10.0% over four consecutive quarters) last traded at 13.6, which represents a 1.3 point drop on the day.