Is it worth a spread bet on Electoral College Votes?
October 10th, 2008
Is now the time to try this form of betting?
With an Obama victory looking more and more certain the focus is moving away from who’ll be the next President to how many electoral college votes the two contenders will win.
An interesting way to bet on this is through the spread markets. Here you “buy and sell” electoral college votes as though they were stocks and shares and the more you are right with your forecast the more you win and the more you are wrong the more you lose.
All three main spread firms have markets running and I’ll be featuring their prices at least every other day until the election is resolved. To become President a contender has to get more than 269 electoral college votes - check with this Wikipedia page for an excellent explanation of how the system all works.
In betting terms if you bought Obama at 336 ECVs at, say, £25 a point, and he ends up with 366 then your winnings would be [The actual total won] minus [the level you bought at] multiplied by [your stake level]. So in this case you would get 30 * £25 = £750. Losses are calculated in the same way.
One other feature is that you can close down your position at any time taking your profit or restricting your loss. Thus currently I hold two contracts - a buy for Obama at 308 ECVs and a sell for McCain at 342 242. So I am amply in profit with both bets and could cash them in if I wanted. I’m staying in there.
The main difference between Spreadfair and the other two firms is that the former is a betting exchange. With the latter the firms fix the prices at regular intervals in response to market moves.
Disclosure note: PB has a relationship with SportingIndex under which commissions are paid for each account opened. This helps towards the cost of running the site. Please use the link.
Mike Smithson
MessageSpace Advertising
You sold McCain for 342?
Surely not first again?
2. Damn, no
BREAKING WIND NEWS **** BREAKING WIND NEWS **** BREAKING WIND NEWS
The breaking news is that WIND is reporting to JNN the contents of a new ARSE (BUTT) poll of polls that indicates :
McCain 45% .. Obama 51.5% .. Others 3.5%
The PISSED Jack W Index with added SOAMES BIG MAC weighting shows :
McCain 143 .. Obama 287 .. Toss Up 107
Changes Since Last Projection - Nil.
Toss Up - Up to 5% .. Likely - 5%-10% .. Safe - Over 10%
Eliminate Toss Up States - 270 required for an Electoral College majority.
McCain 162 .. Obama 376
Obama is the 44th President of the United States of America.
……………………
Sources :
WIND ….. Whimsical Independent News Division.
JNN ………..Jacobite News Network.
ARSE …… Anonymous Random Selection of Electors.
BUTT …… British Underpinned Tracking Totals
PISSED … Political Intelligence Seat Selector Election Determinator
SOAMES …System Of Amending Measured Election Scores
BIG MAC ..Ballot Indicies Grid Manifesting America’s Choice
If Brown’s so brilliant, why aren’t the markets convinced?
You people vote for leaders who crack jokes about the most serious of matters — Brown and recession, Bush and WMD — if you want to.
1..242 methinks!
Looks like Obama has won imo.
McCain camp is in total chaos, imo, they are even worse that the Hillary campaign. The problem is they are not inspiring confidence in management of the economy.
Afternoon all
Just been watching the Fox News morning show. No longer any attempt to be even-handed with constant snide attacks on Obama’s “character” from a series of panellists connected to the GOP, RNC or the American conservative establishment.
The tone is very much one of desperation on the McCain side. On the EVs, I thought 355-183 was as good as it could get for Obama (on the basis of a 52-47 win). If, hoever, we’re looking more at 54-43 or similar, that could be an understimate.
A McCain sell at 226 looks a reasonable proposition.
7 - it’s now a case of how many by, not if Obama wins
Posted this on Dale’s site, wonder if it’s not such an idle thought :
Idle thought : McCain picked Palin as a final FU to the GOP wingnut wing who cost him 2000 and almost made him join the Kerry ticket in 2004.
Palin will now be the poster girl of the fundamentalist sect. She presses all the right buttons.
She’ll be lauded and revered by the likes of Coulter, Hannity and Limbaugh. Any mistakes made won’t be her fault.
And she’s proved to be totally unelectable. So the GOP are effectively stuck with her, although they don’t know it yet.
This could be a painful few years for the Reps, and the worst hasn’t even started
In reply to the last thread’s sociopath comments:
I dislike that term. A social illness is a stupid definition, I think, and I much prefer psychopath, which affects around 1 in 400 in the UK, predominantly men.
Brown isn’t a psychopath. He doesn’t have the charm, the easy people skills. He does have a vast sense of his own importance though.
Back to credit crunch stuff. Not withstanding the price reductions coming thro’ in oil and others, will the attempts to flood the market with money bring us an inflationary bubble 2 years down track.
Its what happenmed after ‘87. I noticed Ken Clarke very cautious about interest rate cuts on TV two nights ago
4 - No changes? Are you discounting the surprising West Virginia poll or is it already factored in?
There’s still great value to be had betting on individual states if you don’t want the risk of spreadbetting. Just check William Hill each morning, I think each of the last 4 days there were crazy prices (today Democrats 1.66 Nevada and 1.57 Virginia)
A lot depends upon how you thingk Troopergate is going to play out. Could be the final factor guaranteeing an Obama landslide - or may amount to nothing at ll. Still either way she must be one of the most disastrous VP picks of all time.
The Financial crises and the political turbulence ensuing could see this as a fin de siecle period. I hope I am wrong, but as Fangorn said,”Time are changing, I can smell it in the air, I can taste it in the water, and the earth tells me so”.
by weathercock October 9th, 2008 at 10:30 pm
I wrote the above yesterday. Chris(from Bethesda) said the quote was from Galadriel not Fangorn. I looked it up in LOTR and found that I was correct. So there!!!!!!
The fin de siecle remnark looks all to realistic to me though.
by weathercock October 10th, 2008 at 1:06 pm
7. I am a Macca backer (but Obama supporter) now desperately looking to hedge, so might take some sort of bet on ECVs.
For me, the key thing is this early voting lark – many states have open their polls so one has to assume that these big poll leads that Obama is currently enjoying are being converted into real votes (unless the US public are lying to pollsters on a massive scale).
I’m sure I read somewhere that 20+ per cent of all votes will have been cast by this time next week. If so, it’s looking very bleak for the McCain ticket – and my bets.
And where is Gordon Brown as the stock markets crash? Not in a school this time no “Downing Street has just announced that he is off to spend the afternoon at the Cheltenham Literary Festival.” (source Rosa Prince, 3 Line Whip)
I’m not sure there is much value in buying Obama at those prices. I can’t see him getting much more than 350 EVs and, if the race tightens (historically this is likely), his spreads can only come down.
I’ll pass.
14- Landslide? Not sure. We’re not talking Reagan or Nixon landslides.
Minnesota seems very very close…Probably the only swing state thats still close, except Ohio and Missouri imo.
14 - if Troopergate does anything, then it will just reinforce her lack of electability.
Like many, I really did think she would be a gamechanger for McCain’s advantage, and had she sounded a bit more intelligent she would have been. Especially as she looked so foxy at the VP debate
Wonder how McCain would have done with either Crist, Romney, Pawlenty or even Joe Lieberman as VP?
11. Given the scale of the debt mountain I was assuming that in the end it would need to be inflated away.
Will Palin do a playboy shoot if she loses ?
12 James. I’ve factored the ARG WV poll in but it carries little weight in ARSE (BUTT) projections. We’ll need further polling to tip the state into Obama’s column.
12. Let’s hope not: It’s ARG - the worst and most random pollster of the bunch.
22 - hope so
What’s Dow Futures saying will happen when Wall St open at half two?
26 - So far down about 240 points!
26 - IG Index has the Dow down 330
http://www.igindex.co.uk/
25. I think I am the only man in the world that doesn’t find this woman attractive. I’d much rather go for Michelle – or even Hillary!
Jack W, Mike Smithson, other soothsayers: Can someone please explain the extent of early voting. I’m sure I read huge numbers, in which case Macca is surely f—–d.
ot.
How insane is Gordo? He is now pretending to be responsible for the drop in world oil prices yet all the other problems have been caused ANother - especially Iceland. I have never been so ashamed of a British PM in my lifetime. He is an absolute disgrace.
29 - she may not be everyone’s cup of PG Tips, but Hillary?
32. Bit of a stretch I’ll admit. Michelle is totally hot however.
How is Iceland playing in the country? Do core Labour supporters like bashing foreigners?
It would be ironic if Russia uses this and the need to secure the billions it has just loaned to Iceland as a pretext to seize BP’s half of TNK-BP.
31, hey, Iceland’s part of the Axis of Evil now! Poor banking practices = blowing people up, apparently.
Sadly this means we now have to invade ourselves.
29. Hilary!! You must be mad
31. He’s talking as if OPEC will take notice of him. Madness.
27 and 28. No relief there then.
30: Ohio early voting was a bit underwhelming, apparently. Highly disproportionately black turnout in Georgia would be the main news there, I guess.
29: I thought it was just me… Agree with you on Palin and Michelle Obama, but I’m afraid I can’t agree with you on Hillary. Cindy McCain, on the other hand…
33 - Michelle is nice, though still prefer Palin
Thankfully Hillary wasn’t on the Obama ticket - she’s be coveting Barack’s presidency while Bill would be coveting Michelle.
USA — I’ve a green book so win on Obama and McCain. What puts me off wading deeper into Obama are doubts about whether the often-unreliable American pollsters have got their weightings right. We saw as recently as the Democrat primaries the pollsters having to adjust to catch up with both Obama and Clinton demographics.
Dow doing a holding pattern at lows. Likely to crash and burn…
“I think I am the only man in the world that doesn’t find this woman attractive.”
Unless you agree with Palin’s views there’s no reason to find her attractive. To think otherwise would be like defending ‘Triumph of the Will’ on the grounds that it has impressive cinematography.
Am I misreading this or is there not an arbitrage opportunity to buy McCain at 208 with IG Index and sell at 226 with Sporting Index for a guaranteed 18xbet win?
42 - put it this way - give me an hour with her and she’ll become an athiest
FTSE at 3962. So what is next week’s plan to give away the next £400bn?
Brown ‘psychologically insecure’
38/39: The Hillary thing was a sort of either/or thing regarding Palin, you know, if at gunpoint, not a desire. Michelle however… yum yum, yes please.
Agreed about Bill – he’d have Rovian hands !
McCain was never 342 to sell, I can only assume the author meant 242. And the Sporting index McCain prices are incorrect. So no arbitrage opportunity.
44. Arf arf!
46, I saw that, was very interesting how she described Brown’s Mandelson decision as virtually self-mutilation.
The body language expert on The Daily Politics said Gordon’s a deeply insecure man who has a need to be liked; thats why he is addicted to spending money whether he has it or not.
No wonder he looks happy.
He has never before spent as much - despite great effort on his part.
He now thinks we love him.
[Oh, not looking good on the tough choices front.]
15- Weathercock
Indeed you’re right.
My only defense is that they gave this quote to Galadriel in the movie…
46 You beat me to it!
42- Your view presumes that you see everything in a pure love/hate context. Some of us see that most things have both positive and negative aspects and can appreciate both. For example, I always appreciated Bill Clinton’s tremendous qualities as a politician, public speaker, and general charmer, even though I never trusted or liked him, let alone his politics.
You know what - I don’t really care that Gordo is mad. Its the incompetence and the lying that hurt the nation.
53. Yes but the key question for you SaS is: Michelle Obama, yes or no?
IG index have wall street at 822 (-460)
FTSE now down more than 400…
Back on topic. I just had a play with the RCP electoral map calculator.
There are 8 Toss-Up states and I’ve allocated them based on recent polls plus a bit of gut feel:
Colorado (Obama)
Nevada (Obama)
Ohio (Obama)
Florida (Obama)
Missouri (McCain)
Indiana (McCain)
West Virginia (MCain)
North Carolina I’m really not sure about. Should be McCain but polls are saying Obama.
If I give Obama North Carolina then it comes out as 353 for Obama and 185 for McCain
If I give McCain North Carolina then it comes out as 338 for Obama and 200 for McCain
There is not a huge amount of upside there on the spreads and a fair risk if McCain strengthens over the coming weeks. Ohio and Florida could come back to McCain if he closes the gap by even a couple of points.
So if you think Obama is strong enough to carry most of these Toss-Up states (and also add some surprises like Georgia and possibly Texas) then go for it.
I think Obama will win but my expectation is that it will be closer than the polls are indicating now.
55- Is that a key question? LOL (and I never use LOL, so consider yourself blessed).
Okay, I’ll play your game. I would rate Michelle Obama around a 5 or 6.
46 - What a waste of licence-payers’ money.
56 - I reckon it could fall off of a very big cliff. It may well be a relatively good thing in that it could be seen as cathartic!
53 Also the finest liar in the White House since Nixon. His sayings are up there with Tricky Dicky’s there can be no white wash in the white house statement for classic status.
Con home calls Glenrothes for Labour !
http://conservativehome.blogs.com/centreright/2008/10/glenrothes-and.html
http://stateoftheunion.wordpress.com/2008/10/09/behind-mccains-fall/
Further falls in the stock market are not good for McCain looking at this graph …
Using the latest 10,000 case simulation on http://www.fivethirtyeight.com/ as the current best guess of the expected number of EVs and the risk i.e. spread of outturns, I reckon there is a 10% chance of BO getting around 250 EVs, a 40% chance of around 330 EVs, a 30% chance of around 380 EVs and a 20% chance of around 420 EVs. I got this is by spliting the distribution of cases into four small triangles and taking the centre of gravity of each triangle as the number of EVs and the area of each triangle as the probability. Hope you are with me so far.
So if you buy BO at 336, you have a 10% chance of losing 86, a 40% chance of losing 6, a 30% chance of gaining 44 and a 20% chance of gaining 84. This is obviously a gross simplification but better, I think, than a single number expectation as it gives some indication of the risk. Looks like a good value bet.
However it assumes the polls are a good indicator (ignores Bradley effect) and assumes no trend or gamechanger. Too risky for me. I’ll leave it to braver souls.
On topic: I’d like this bet, I think there’s money to be made. Spread betting scares me, there’s such a huge risk of a massive loss. I think I’m going to stick to a few individual close state bets, to give the election night a bit of risk and to make everyone look at me funny at the election party when I shout “COME ON NORTH CAROLINA!”.
Last thread and on this thread: I think most people have got over the fact that Brown’s a bit of a weirdo. Yes he’s smiling and happy in the face of one of the worst economic crisises to ever befall Britain but that’s sort of what I would expect from Gordon Brown, if he was behaving like a normal human being I would be very freaked out.
66, got over it? They may have become aware of it but that’s not the same as not caring.
And another thing… will Brown please do up his tie properly or take it off. The knot should cover the collar centre so we can’t see the hangman cloth around the neck.
It looks scruffy, sloppy and slapdash.
Please. It does not increase my confidence in people who dress like that, of any party or profession.
56
DOW 8200 is a key support level. It’s likely to fail in this selloff.
67. True. But I don’t think “GB acts like antisocial weirdo” will make the headlines tomorrow.
70, I concur. However, the joke about a failing bank will not stand the test of time well. And if a bank does fail…
69 - Do you think we will test 8000 in this session?
brent crude down 641.
“Your view presumes that you see everything in a pure love/hate context.”
No, only that I do not believe in decontextualizing aesthetics from morality. The director of ‘Triumph of the Will’ was undeniably an artist of rare talent, but the film’s beauty cannot excuse its propagandizing in favour of an ideology that was both anti-art (for totalitarianism of any kind is inimical to true art) and anti-humanity.
Or to put it another way: You can put lipstick on a pig, but…
70 It is making some chat show news today.
Worth a click.
http://www.thedailymash.co.uk/politics/politics-headlines/brown-thinks-he-is-the-fonz-200810101315/
63. I don’t think Labour will win Glenrothes. I think the markets and soon after the media are on to Gordon. He is not in the lead here.
70 The Daily Mash gets it just right on Gordon
http://www.thedailymash.co.uk/politics/politics-headlines/brown-thinks-he-is-the-fonz-200810101315/
Last paragraph probably close to what the Tory posters on here think.
Also good on Iceland
http://www.thedailymash.co.uk/news/war/councils-invested-%A31bn-in-tiny-volcano-surrounded-by-fish-200810101314/
FTSE down over 9%….
One thing Labour definitely won’t win is the 42-day detention vote in the Lords.
76 snap (would have beaten you to it except I added the Iceland bit!)
79 - Dow futures dropping like a stone!
If Glenrothes was today? Maybe Labour wins, even with their invisible candidate. But by polling day we have three weeks of context to current events, which I don’t expect to be kind to Labour.
HBOS down 25%, Lloyds down 5% Is something happening out there?
FTSE now down 400 points.
83, perhaps an opportunity to bet on the SNP then?
Latest Diageo/Hotline tracker :
McCain 41% .. Obama 48%
Note - Yesterday - M-41/O-47.
http://www.nationaljournal.com/hotline/dailytracker/
84 Fear, panic & fear
Scanning quickly through today’s post, I was surprised to find that nobody had commented on the 12 point hike in SPIN’s prices for Obama’s EV count.
For ages now, SPIN has been lagging way behind the Intrade, RCP and other projections. It now stands at 330/336 and although I think Obama will go above this, most of the value has gone.
The trouble is that it’s hard to see him winning much above 375. Intrade projects 364. Indiana is likely to add another 11 EVs, which brings us within scratching distance of Jack’s BUTT [376].
Where then?
The next candidate States which may turn blue are Montana [3], North Dakota [3] and West Virginia - all long shots and slim pickings anyway. Georgia is better at 15 but still a long shot. Next stop is Texas with a stonking 34 EVs but even I, as an Obama supporter ever since Mike first touted him on this Site two years ago, cannot see the Lone Star State flipping.
So you see, you have a realistic chance of winning a maximum 40 or so points if everything goes well for Obama over the next four weeks. Otoh, if The October Surprise turns out to be more than hot air, or the tide suddenly turns for some other reason, you have a hell of a lot of downside exposure.
If you haven’t bought into Obama on the spreads by now, I’d forget it. Try the Senate race. Might be some value to be had there.
Hey Prescott issued instructions to LAs to get the best returns, even if they were in foreign banks.
Some of them had stuff on 3 month deposits and so couldn’t withdraw them when things started to look iffy.
I am not entirely sympathic. I rejected an overseas investment in favour of watching my money disappear at home.
88 - Is that a law firm?
I think Ohio will go McCain, as will Indiana, Missouri, N.C. Nevada (perhaps) ….
Glenrothes. I don’t know whether in the long run this crisis is going to be better for Labour or the Conservatives in England (I still think the Lib Dems got more traction thanks to Vince Cable than many of you give them credit for) but in Scotland Labour are going to get a real kicking. And it will start in Glenrothes.
The Local Authorities there who have lost money with the Icelandic banks have been told that Local Government finance in Scotland is a Holyrood matter, not something reserved to London. So Whitehall will see the English authorities are OK, but not those north of Hadrian’s Wall. Mc Swinney has been saying No, it’s a financial services regulation matter, not a local government finance matter, which I must say seems entirely reasonable to me. In any event, it is making Labour look shifty as well as incompetent, and opportunist as well as spiteful.
72
Test 8000?
I expect we MAY - note my caution - close well below it tonight. Either that or we bottom.. but Monday possible..
78.”But the Treasury has so far refused, criticising the councils for investing huge amounts of public money in badly run banks.”
Isn’t that a change of policy direction in less than 24 hours?
80. Michael White was suggesting that Brown may quietly drop 42 day detention and let it die with the lords vote. To help consolidate his position of strength within the party and to prevent a big controversial issue reminding the public why they hate him. It seems too optimistic but we can hope.
Nouriel Roubini on Bloomberg is a cheerful soul!
Unconfirmed Rasmussen tracker - M-45/O-50. Unchanged.
Hopefully he’ll let ID cards die with it. it’s not as if the government can afford them now.
66 G
A more entertaining and possibly profitable shout might be: ‘Go West Virginia!’ [Go west, Virginia...geddit? Alright, I'm off.]
97
He’s been proven right over the past 4 years..
I expect we will see FTSE sub 2,000 by 2009/10.
And any chance of Labour winning any GE for 15 years? Gone with the pension funds..
74- Who’s “excusing” Palin’s views based on her physical attractiveness?
???
101 On reflection, I’d avoid ‘come on Virginia.’ Might be misinterpreted.
89 PtP. I’d rate Georgia before North Dakota, West Virginia and Montana.
96. Yes. But he will say it has not been dropped but will be in the next manifesto -except it won’t because he will not be drafting it.
101 - He was suggesting that we need an immediate worldwide 150 bps interest rate cut, global recapitalisation of banks, global 100% deposit guarantees. Otherwise depression!!
Montana, W.V, Georgia are not worth any bets. McCain will win those with atleast 5%
For sure VA is going to Obama, all polls are comfortable for him.
92 You are entitled to your opinion, Jaz.
If you intend to bet on those, you will surely find no shortage of takers.
Brown drop 42 days?!
April 1st was over 6 months ago, buddy.
Brown drop ID cards?!
HAHAHAHAHAHAHA
104 Yes Jack, you can argue about the precise order in which they might fall, but you can’t dispute that there’s nothing really juicy in terms of EVs until you get to Texas. That’s the point I was trying to make.
I’ve actually had a few quid on Obama to win win Texas at double figure odds but I will be astonished if it comes in.
110. I.D. cars will look even more like an expensive waste now, as will all those promises he made in his conference speech.
Latest Rasmussen tracker :
McCain 45% .. Obama 50%
Note - Unchanged.
http://www.rasmussenreports.com/public_content/politics/election_20082/2008_presidential_election/daily_presidential_tracking_poll
Dow down 133….144….154….186….207….224….240
112 - Oh I forgot about that, wasn’t it laptops and broadband for the poor!
There’s as much chance of Labour dropping ID cards and 42 days as Osama bin Laden has of winning Miss America; in fact if he were to shave off his beard he’d have better odds.
Dow according to google:
-932.59 (-10.07%)
Dow down 263….299….304….346….
http://www.guardian.co.uk/politics/blog/2008/oct/09/gordonbrown.labour
Some interesting points about Brown’s reshuffle.
Maybe Dave should start PMQs off by asking why the Government/Cabinet/Payroll is bigger than ever.
111 PtP. Georgia’s fifteen is quite “juicy”.
http://finance.google.com/finance?cid=983582 Live Dow Tracker
Dow down 581
111 PtP, with way McCains campaign is crashing added to depressed people as result of crash I’m beginning to wonder if there will be a very depressed GOTV on GOP side compared to a stimulated one on Obama’s. Could be you are on to a winner with Texas.
DOW now Tankinggggggggggggggggggggggggggggg.
Dwo down 384…402…438…445…454…461…479…498….509
8,080.43
-1,177.67 (-12.72% )
120 Might be OK for an Old Codger like you Jack, but I prefer mine bigger than that.
TV Networks are lagging…
-1,182.37 (-12.77%)
Dow starts with a 7…
dow under 8000
Dow down 522…529…557…578….600
Below 8000
Dow sub 8000. Good god.
-600. Dow to plaunge past 7500 barrier today?
I think we may need a fairly swift 1%+ rate cut to stop this slide. Otherwise we are in danger of talking ourselves in2 total meltdown!!
121 That is a depressing page - the DOW is tanking on each refresh.
Er, so, is THIS a stock market crash?
DOW -680
Surely there has to be some buying of quality at these levels?
136, you aren’t paying attention. This is Gordon saving the world economy.
Dow rallying…
If the google page is correct shouldn’t trading have been halted?
There is a circuit breaker for an 1100 point decline before 2pm in the US.
http://www.nyse.com/press/circuit_breakers.html
139. Thanks, don’t tell Gordon I doubted him.
127 PtP. I’d heard you were a “size queen” !!
Looks to be an equally rapid rise - down a mere 380
Crazy volatility.
Berlusconi saying that a supsension of world markets has been discussed…..oh God!
The financial system is collapsing
Big rally now…
142, I won’t need to. His 12bn database will find your doubting, his 20bn ID card scheme will be able to identify your last transaction location and his 42 day detention will prove ample time to beat a confession out of you.
123 There are some interesting cross-currents, Ted.
Some will no doubt be unwilling to vote for a black President. Others will vote for Obama precisely because he is black. Then there’s the GOTV, which is supposed to be an Obama strength.
There are quite a few imponderables in this election. I suspect that the polls are, if anything, underestimating Obama’s position but I don’t like guessing when putting down hard cash. I’ve tended to dismiss the imponderables as broadly neutral and go on what the polls, MSM and the blogosphere are telling me.
If I had to guess now, I’d say Jack’s BUTT is as good a guide as any - 376 to Obama, give or take the odd CD.
Not sure, but Google, Yahoo stats which are live. Massive rally at the minute…
147 but will it follow the FTSE pattern? Big fall, bounce, decline, then?
It was minus 1100, I went to drop my bottle in the bin and it was minus 300. Crazy stuff.
Massive rally to -300 ?
143 Jack
Remember Benny Hill in The Italian Job?
Mmmmmmmmm……….
154 - Only -150 now… crazy!
14.45 now..
now 14.46 !!!
Dow -161.05 (-1.88%)
My buy of RIO is up 30, what a day. Banks powering the Dow. Gonna sell now.
Why is Barclays trying to avoid the Gordian banking deal?
It was never -1100, that would have been below 7500. It only briefly went below 8000. There was an error on the Google/Yahoo site, it is fixed now.
And why are people hoarding dollars when the US economy is in such bad shape?
162. Not enough gold to go round?
161. Accoring to IG Index, which shows live trades, not Googles delayed numbers, it ’spiked’ down to -1300
146.Sky reported on that rumour just as the Dow seemed to rally.
155 PtP. Indeed.
…………….
Meanwhile ….
New WSOCtv/Eyewitness News poll for North Carolina :
McCain 47.8% .. Obama 46%
http://www.wsoctv.com/download/2008/1009/17671509.pdf
The rally is presumably linked to the end of the Lehmann auction - any experts here care to comment? Incidentally, thanks to Ken and others who have given us the benefit of their expertise without too much partisan wrapping.
It tempts me into admitting ignorance of something which I ought to understand, which is why interbank lending is so crucial. I get the fact that nervousness about level of debt makes banks reluctant to lend to each other, and that this makes the system less efficient, because a loan by bank X to bank Y to enable Y to lend to business Z for some sensible purpose doesn’t happen. But surely this just means that some banks (X in this case) have more cash available for loans that they’d otherwise have lent to other banks. Why is business Z not able to get a loan at all, not even from X? Advice welcome, and you get to sneer about ignorant MPs if you like.
A few other points on the threads:
- Gordon looks confident and positive for the same reason that anyone does when they’re doing an important job in a crisis and they feel they’re on top of it - wartime commanders generally look the same. You might disagree with his assessment but that’s the reason for it, and you don’t actually want a leader in a crisis looking shattered and miserable.
- I’m a bit surprised by the widespread acceptance by Tories that they’re about to slump in the polls. I don’t think the electorate moves that quickly - I expect us to edge up a bit, but a Tory lead of 9-10% is still IMO likely. But I do think people are noticing the apparent absence of ideas or even media presence of the Tory front bench. Cameron, I recall, was A Man With a Plan. What was the plan? I can’t remember, and it’s my job to pay attention to such things, so I doubt if the public can either. Is it relevant? Does it need updating?
160 - because it dilutes their share capital. If they can avoid the deal, they will look attractive from a dividend / capital gains persepective compared to banks which do not take up Gordos (feeble) offer.
163 Spot on with the gold comment. US dollars are seen as the next best safe haven after gold.
167. ‘I’m a bit surprised by the widespread acceptance by Tories that they’re about to slump in the polls.’
Erm, I don’t recall that being generally accepted.
170 - Rather there is a widespread belief by the Labourites they will be improving their position (substantially) in the polls.
167. I believe the plan was to fix the society that you and your chums broke.
I wouldn’t say that Brown is one top of events either. World leaders are undoubtedly being led by events and those events are leaving them all, including Brown, further and further Brown. There is only so much posturing the man can do before he has to formulate another plan. Plan Z 2.0 I believe?
171. Labour supporters think that 24/7 coverage of Brown laughing at bank collapse and bullying small countries is popular with the voters.
172. That should read ‘further and further behind’ and not ‘further and further Brown’. That man is clearly always on my mind.
171. That’s what I thought. Most proclaimed tories on here think we’ll stay around the same, some labour supporters are blindly asusming it will help them gain ground.
And as for the man with a plan jibe nick, remember ‘no more boom and bust’ from your glorious leader?
Lloyds TSB down 6% today - HBoS down 26% today. There is going to be some serious pressure to unravel - or at least renegotiate - that deal.
NickP
Bank Y has lots of private information on business Z. Bank X is probably in a different country/different line of business. Bank Y built up information on business Z through years of transactions and personal contact. Small firms end up with a single bank because they cannot invest the time and effort of building two such relationships. As soon as a business gets scale, it goes for multiple lending relationships so that they can avoid monopoly profits for the single bank.
167, the plummeting stock markets are Brown being on top of things?
I agree Cameron should be more visible though.
What do you make of the collapsing bank joke?
167 “The man with a plan”. That proved to lack substance didn’t it. The Tories performance has been very weak.
I agree though we’re still in for a substantial Tory lead. Any Labourite who celebrating is seriously misguided.
Bush to make a speech in about 20 minutes to give confidence to the markets….
167.”- Gordon looks confident and positive for the same reason that anyone does when they’re doing an important job in a crisis and they feel they’re on top of it - wartime commanders generally look the same.”
Nick, can you please stop referring to the military when trying to big up your leader.
178. Agreed. Cameron and Osborne really should be holding some sort of daily joint press conference.
Sorry to turn to such trivialities whilst the stockmmarket burns - but I now think the chances of Gordon going before the next election have risen hugely.
He will have his ‘hour’ and then stick it out through the recession. Then Mandelson will force him out - the flack he’s taken will make him a liabilty.
He will fake a voluntary resignation saying he has given the country all he has - too tired, steered through the troubled times etc.
He will think he has a face saving [enhancing?] reason to go and something he thinks he can take away for posterity - the man who steered us through our financial dark hour.
He will think of Churchill, draw parallels and wait for the acclaim of history.
167 - Nick P - in answer to your question - because banks have to spread their loans (via statutory requirements) across different bands of credit risk. Interbank lending (until lately) was seen as a safe loan, so they could make risker loans (i.e. to business, consumers and on credit cards) because the proportion of safe loans they had to makes were covered by lending to other banks.
Now if a safe bank suddenly becomes a risky loan (i.e. credit ratings for the bank are downgraded) the bank can either (1) find a different safe place to lend or (2) cut back the amount of risky loans they have to restore the proportion of safe loans they need.
This is why the rescue package will fail; even if the banks take the government money, they cannot currently lend to other banks (as they are now seen as risky) and cannot lend to businesses or consumers (high risk loans) because this would break their required proportion of safe to risky loans.
When conjurers want something to disappear in future they will no longer use the traditional incantation. It will surely be adapted to ‘Heh, Prescott, its gone!”
179, back to “all style no substance” I see. Will he be a toff, a chameleon etc etc as well?
183, I’m not so sure. Labour cannot get rid of him in the immediate term. Will they want to do so after the financial crisis subsides (if it does) and during/before the recession?
I think Brown will hope on, clinging to the 1992 result like a comfort blanket, hoping it’ll happen for him.
167: ‘I’m a bit surprised by the widespread acceptance by Tories that they’re about to slump in the polls.’
I suspect that’s merely what you hope the Tories are thinking Nick.
167 - Interbank lending freezing up means that the banks don’t trust each other anymore.
And the following blog post explains why we need the banks to trust each other if we are going to have food to eat or fuel to heat ourselves with.
http://www.nakedcapitalism.com/2008/10/international-trade-seizing-up-due-to.html
167. NP - This article explains in fairly accessible terms the pressures building on many of the banks:
http://mises.org/story/3146
Cameron and Osbourne are doing the right thing keeping out of this. The main thing they should do when they are on screen is associate themselves with the little people and not with the bankers to nullify the default association.