How Tim Geithner Can Guarantee a 43% Return on Your Money This Year

The betting odds that Timothy Geithner will remain Treasury Secretary until Dec. 31 are currently about 3 to 7. For every $7 you wager, if he stays, you come away with $10. Alternately, if you bet correctly that he'll depart, your $3 bet more than triples.

So how do you bet?

During the general election, I learned that bookmakers are extraordinarily accurate in their predictions of political outcomes, more so than the best polls. As an experiment, I asked one of America's foremost handicappers to take time out from the grandstand and bet on political outcomes. Ray Paulick was once a protégé of oddsmaker "Jimmy The Greek" and is now editor of the thoroughbred industry insiders' Paulick Report. He always has been a political junkie.

He thought it would be easier handicapping political outcomes than horse races. "In a ten-horse field on the track, so many more things can go wrong and there are so many more variables," he said.

I bankrolled us with $1,000 in play money and picked some of the most popular predictions markets on sites Intrade and Betfair. Among measures taken for simplicity's sake, each bet was $100. Here are the results so far:

1. Obama to Win Presidency, 4-3 odds: Paulick, impressed early with grassroots campaign, wins $167

2. Obama to Win in Kentucky, 7.5-100 odds: Paulick, a Kentuckian, wins $107.50

3. Voter turnout prediction between 60-65% for 2008, 28-1 odds: Paulick loses $100 -- the correct answer was 56.8%. "I erred in misreading how blasé the right was about McCain," he says.

4. Hillary Clinton named Secretary of State, 66-1 odds: $100 loss; Paulick said, "Knowing that Obama was very big on Lincoln's team of rivals, it shouldn't have surprised me."

5. Caroline Kennedy to fill Hillary Clinton's Senate seat, 1-3 odds: $100 loss

6. Blagojevich still Gov. of Illinois on/after Dec 31, 2008, 7-1 odds: $800 win; "Justice doesn't move that fast."

7. Franken Wins MN, 6-100 (bet for: tbd)

8. Coleman Wins MN, 24-1 (bet against: tbd)

9. Steele to be Next Chairperson of the Republican National Committee, 3-2 odds: $250 win; Paulick: "The Republican Party is so transparent, it seemed likely they would overreact to their defeat by electing an African American and attempt to broaden their reach superficially rather than by actually changing their policies."

10. Andrew Cuomo does not fill Hillary Clinton's Senate seat, 5-6 odds: $120 win; "Cuomo would rather have Paterson's job."

11. Rahm Emanuel to depart as Chief of Staff on/before Dec 31, 2008, 16-1 odds: $100 loss.

12. Libby Pardon, 5-6 odds: $183.33 win: "People, unlike stocks and mutual funds, perform in accordance with past performance. Past performance -- what we look at in handicapping a horserace -- would lead one to conclude that the current administration would consider the pardon. But Bush already addressed the Libby issue with the commutation."

13. Leon Panetta to be confirmed by US Senate as Director of CIA, 2-100 odds: $102 win

14. Rick Wagoner Resigns by March, 2009, 99-1 odds: $100 loss

15. Tom DeLay Guilty of Laundering, 5-2 odds: (bet of not guilty, tbd)

16. I Love You Man Opening Weekend Domestic Box Office Receipts $17.5 million, 4-1 odds: Paulick took the under, missing by $310,270, losing $100

17. Obama Job Approval Rating on March 31, 2009 between 60-64.9%, 2-3 odds: $167 win

18. U.S. Average Gas Price $2.00-$2.25 on March 31, 2009, 1-1 odds: $200 win

Summary: If Paulick were a hedge fund, he would be up $1493.83, a rate of return of 149% over five months. At that clip, over an entire year, he would return 359%.

So what's his line on Geithner?

"I think there's only a twenty-five-percent chance that he's going to leave," Paulick said, "unless there's some kind of scandal. Certainly he's a guy that the critics don't like, and certainly he's had a rough start. But he's settling in."

So one way or the other, everyone now can like Geithner.

Comments

[joebhed]

HOW TO NATIONALIZE CREDIT . . . Congress [could] provide for governmental purchase of the capital stock of the 12 central Federal Reserve Banks from the member banks which now own it. This cost would correct the present anomalous situation of a privately-owned bank of issue. The Federal Reserve Banks could then create money in the form of "Federal Reserve Bank credit" entries on their books just as they do now. A "National Credit Account" (in contrast to present national debt) could be established on the central banks' books in favor of the United States Treasury. To such an account would be credited each year such amounts of newly created "Reserve Bank credit"as would provide the increased purchasing power needed to maintain economic balance and a stable price level.

The Treasury would draw checks against their account and pay them out to those to whom the government owed money, thus getting it into the purchasing power stream. In this way the whole nation would derive the benefit from the creation of the additional supply of money which its own growth had made necessary. No interest bearing debt would be incurred. Should inflation threaten so that it was desirable to reduce the volume of money in circulation, the process could be reversed. The Treasury could transfer a portion of its tax revenues to the central banks for cancellation and retirement of the requisite amount of money to restore stability.

-Jerry Voorhis, Beyond Victory, 1944

That's why my Dad was a big

[AhnAmuru]

Another derivatives trader.

[lucyring]

Geithner would be wise to wager a few billion government dollars that he won't last. Then he should resign his position. By thus winning the bet, he'll more than triple the money. He'll be a hero and fiscal savior and he can get his job back. It's not like bookies can bring him up on charges of insider trading.

[marxmarv]

They could bring him down, depending on the quality of his Secret Service detail.

[lucyring]

These are Silicon Valley-type bookies. The worst they could do would be e-mail him a virus.

[Lemeritus]

Ah, jeez... from the headline, I was hoping for an article that would FINALLY explain how Geithner's plan has a snowball's chance in hell of succeeding.

[rsprags]

The same folks screaming for naturalization would be saying the opposite if the President and Treasury had decided to go that way. As the President 's team have to make the best decision possible and redirect their efforts if needed. This economic down turn has never been witness so all the experts are lying if they say they know what to do. Many of the economist talking have never been a part of an administration or work actively to correct a down turn. They teach others and some of the same folks who caused this problem was their students.

[PATina]

Well.. just because he may stay on as Treasury Sec... doesn't mean he will do a good job at Treasury... nor does it mean I have to like him

[Viper]

Inherited the worst economic problem in 80 years.. maybe worse given that back then we made everything, did not have huge defictis trade and budget.

And he has a bunch of fools shouting nationalization.. who never show what the cost of that is, eventhough we have cost on 40 nationalizations this past 2 year... and that would indicate a cost of about 15 trllion and wiping out 60% of the banking system.. see the Nationalization of Indy Mac for such costs. it was asimple small regional bank... Citi and the big international boys will not be cheaper...

regards

[Allen J]

He did not "inherit" this mess. He was on the front lines of this problem by serving as president of the Federal Reserve Bank of New York. In his job (to regulate Wall Street) he utterly failed, failing to sound the alarm, take necessary action, basically do anything to help the prevent the crisis.

[OzzieTonto]

Not so. Geithner is the guy, remember, who composed the disastrous Asian bailout plans for the IMF in the nineties, and brought that outfit into total disrepute. Look around Yankee: other countries have 'nationalised' without all this angst and it has stopped the thieves,e.g. in the City of London, from ripping off anything like as much as Wall Street has.

[Lochmon]

Wanna bet?