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.
Please take this discussion and these insights to www.cnbc.com and challenge some of the bogus reasoning that is passing for journalism there.
The claim made here http://www.cnbc.com/id/26977132 demands intelligent dissection.
Email fastmoney-web@cnbc.com and tell them why a statement like this...
As you can see from the chart, “there’s big volatility in this market and big volatility never happens in the middle (of a cycle). By all accounts big volatility only comes at the top or the bottom,” Worth says. And this certainly isn't the top.
...is nonsense. And that Worth should be challenged to provide a ton of references to back up his claim.