Online market sees 80 percent chance bailout will pass
NEW YORK (Reuters) - Investors see an 80 percent chance the U.S. Congress will approve a bailout of financial services companies on or before September 30, according to the online prediction market Intrade.
The market opened on Tuesday at 60 percent and has ranged between 55 percent and 95 percent. It traded at 80 percent as of 2:26 p.m. EDT.
Intrade said at 444 trades in a little more than 24 hours, the bailout question has been one of the more popular markets recently, on par with a market on whether Republican vice presidential candidate Sarah Palin might be replaced.
"We try to list markets that generate the most useful predictive information, and whether the bailout goes through or not is a matter of billions of dollars in value for shareholders in these financial companies," said Chad Rigetti, Intrade's vice president for business development.
"There's no other place you can go for a synthesized number that is just a probability: Tell me, what's going to happen?"
U.S. Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben Bernanke are asking Congress to approve a $700 billion package that would enable the Treasury to buy distressed debt from financial institutions to clean up their balance sheets and usher in a new wave of lending.
Lawmakers from both major parties have expressed skepticism and opposition, but many also say some kind of package is needed to avoid a financial catastrophe.
Intrade accepts trades on the probability of all manner of events, often with a political bent. For example investors see a 54.7 percent chance that Barack Obama will win the U.S. presidential election versus 45.6 percent for John McCain.
The probability that Palin would be withdrawn was trading at 5.7 percent, down from a life high of 18.9 percent shortly after McCain shocked the world by selecting the relatively unknown governor of Alaska as his running mate.
The markets are priced from zero to 100, with zero meaning investors see no chance an event will happen and 100 meaning it already has happened.
(Editing by Gerald E. McCormick)
