1) Eliezer_Yudkowsky: You should be comparing the percentage (1) change in the S&P 500 (2) to the change (3) in probability of any bailout happening (4) over the days in which the changes occurred (5) and have used more than one day (6). There, that's six errors in your calculation I count, of varying severity.
2) Tim_Tyler: Yeah, I'm surprised that hasn't been posted on Slashdot yet. I want to be the first to propose the theory that United Airlines was behind that, since Google was the cause of a recent fake plunge in United's stock price, when they highly ranked an old story about United's bankruptcy, fooling some into thinking it was happening again and they need to sell. Okay, maybe not "cause", but they started the chain reaction, and United blames them.
3) Peter_McCluskey: Whoa whoa whoa, are you now admitting that measuring the correlation between InTrade contracts and financial variables over a succession of days rather than a single day is important?
With today's snapback, the Dow lost 777 and regained 485.
As of this evening, Intrade says the probability of a bailout bill passing by Oct 31st is 85%.
(777-485)/(1-.85) = 1,946. So a bailout bill makes an expected difference of 2000 points on the Dow.
Of course this is a bogus calculation, but it's an interesting one. Not overwhelmingly on-topic for OB, but it involves prediction markets and I didn't see anyone else pointing it out. I hope the bailout fails decisively, so this calculation can be tested.
PS: Bryan Caplan understands Bayes's Rule: It's not possible for both A and ~A to be evidence in favor of B. So which of the two possibilities, "unemployment stays under 8% following a bailout" and "unemployment goes over 8% following a bailout", is evidence for the proposition "the bailout was necessary to prevent economic catastrophe", and which is evidence against? Take your stand now; afterward is too late for us to trust your reasoning.