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A free lunch courtesy of Dr Paul’s supporters

October 14, 2007

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Is betting against Ron Paul money for nothing?

Fans of the Efficient Market Hypothesis like to say that ‘there’s no such thing as a free lunch’. Of course, I don’t believe this, since if I did I wouldn’t be writing this web-log or betting on Presidential Elections. However, it is always a good idea of be sceptical of bets ‘that cannot lose’ because they have a very nasty habit of biting the wary punter in the behind (although I have to admit that academic studies show the value is generally in shorter odds). The case of Ron Paul is undeniably an exception. Few people anticipated the way in which Rudolph Giuliani has prospered in the battle for the Republican nomination, despite his (relative to the rest of the Republican Party) socially liberal views, flamboyant private life and the fact that he couldn’t beat Hillary Clinton in 2000. However, unless the world really has gone upside down I don’t believe that the Republican Party would ever nominate an antiwar, pro-drug legalisation crackpot who ran as a Libertarian in 1988 and got less than 1% of the vote.

Indeed, I don’t believe that the ‘balance of probabilities’ is against him winning the nomination I just can’t see any scenario whatsoever where he wins the nomination. Of course nothing is an absolute impossibility but I put it up there with the US Government defaulting on its debt, the Liberal Democrats winning the next British election and other such absurdities. However, what I can’t understand is the fact that Paul’s price on Intrade.com is 6.9-7.0. At this price betting against Paul produces a much better interest rate than putting it in a bank account. However, what really intrigues me is the reason for this price, which gives Ron Paul a higher probability of winning the nomination than either John McCain or Mike Hukabee. There have been moments where the betting markets have gone insane, but they tend to be on election nights when punters overestimate the accuracy of opinion polls rather than during the campaign itself. The fact that Ron Paul has a small band of fanatical supporters could be one reason but other fringe candidates aren’t similarly overpriced.

What do you think? If you agree or disagree with this article leave a comment below.

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3 comments

  1. If it’s such a sure bet, go ahead and put your savings against him.

    7 percent might be a tad high right now, but I think it’s obvious that he has a better chance than McCain or Huckabee. He has more cash on hand than both of them put together, and has more volunteers than the other ten Republican candidates combined.

    His low name recognition and longshot status are keeping him down in the polls, but he just spent $400K on radio ads in early primary states, so that could change in a hurry.


  2. Oh, here’s a scenario where he wins:

    Early events like the Iowa and Nevada caucuses and Wyoming delegate selection conventions have very low turnout — kind of like the straw polls he has been winning left and right.

    Libertarian-leaning New Hampshirites back him in a big way.

    Disgruntled Democrats in Michigan (most of the Dems were removed from the ballot) switch parties and give him another huge early win.

    All of a sudden, Ron Paul looks like the candidate with all the momentum, and the 30% of Republicans who are anti-war all go to him. Then the 25% of Republicans who like his small government views back him too, realizing that a pro-war candidate is doomed anyway.


  3. A few points:

    1. Cash, although necessary, doesn’t guarantee success. After all, Denis Kucinich raised $8m and Lyndon LaRouche raised $18m in 2004 – and Howard Dean outraised everyone.

    2. There are anti-war Republicans but there are very few who want to legalise drugs or disband the FBI.

    3. Disgruntled dems in Michagan (if the problem isn’t resolved by February) will go to either McCain or Giuliani.



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