Sunday, October 17, 2004

Presidential Futures Markets Being Manipulated

The presidential futures markets have proven to be the most reliable indicator of who will win the presidential election in the past. The two most commonly viewed futures markets are the Iowa Electronic Market and the Trade Sports Futures market. They have shown approximately the same ups and downs for the president throughout the campaign with each paralleling the others price pretty closely at any given time. For example, if Trade Sports shows the President at 55, that means investors feel that he has a 55% chance of winning the election. Normally if Trade Sports is showing 55, the Iowa Electronic Market will show a price close to 55. However, there is now proof that someone is trying to manipulate the Trade Sports futures market in an attempt to driver the President's numbers down. Donald Luskin has taken a look at the swings in that particular market, spoken to sources at Trade Sports and determined that someone with a lot of money to spend has an interest in lowering the presidents re-elect numbers. Read the entire article here. An excerpt:

There is now no question whatsoever that the Bush re-election futures contract at Tradesports.com is being manipulated. Yesterday the price of the futures were sold down from about 55 (indicating the market's estimate of a 55% probability of Bush's re-election) to 10 (indicating on a 10% probability) with a single 10,000-lot order entered by a single trader. An order that size represents twice the normal volume of an entire typical day's trading. Within moments after the order was completed, the price recovered back to the low-mid-50's.

According to sources at Tradesports, yesterday's order was entered by the same individual who has heavily sold the Bush futures three times over the past month. The first instance was on September 14, when this trader sold the futures down from the mid-60's to 49.6. The second instance was in the middle of the second presidential debate on October 8, when the futures were sold down from the high 50's to 51.5. The third instance was right after the third presidential debate on October13. As the debate began the futures were priced at 57, and by the end of the debate they had risen to 60. Then a few moments later they were beaten down to 54 in a matter of minutes.


So who in the past has launched a speculative market attack? Why George Soros, the billionaire who has promised to spend his entire fortune to defeat George W. Bush. Donald Luskin continues:

The classic example of a speculative attack is when George Soros massively shorted the British pound in September, 1992. The Bank of England was obliged to support the pound's exchange rate under the European Exchange Rate Mechanism. With the pound plunging and the BoE pouring billions into supporting it, prospects for the British economy were damaged -- making the pound even weaker. Eventually the BoE exhausted its will to support the pound , and had to pull out of the ERM. The pound collapsed -- and Soros is said to have made a billion dollars on this speculative attack.


It is safe to say that the futures markets, indicators that have been the most accurate indicators in the past, may be less reliable in this campaign. Nevr has the irrational hatred of a president been so high as to cause someone to want to manipulate the market in an attempt to panick the supporters of a candidate. It is probably safe to say that the polls, daily tracking polls as well as the polls released by newspapers and magazines are not reliable either. The fact of the matter is that most of the newspapers whop run the polls have an agenda, especially those who are teamed with a network news agency like CBS or ABC. It would be very easy for any of tehse agencies to skew a poll to favor the candidate of their choice. We have seen CBS run a story using forged documents and run a story based on the lie that Bush will re-instate the draft. The bias of Brokaw, Jennings, Rather, Couric and countless other correspondants is plain for anyone to see. If a network like CBS is willing to risk the credability of its nes service built over 75 years by using obviously fake documents against the president, then a little poll manipulation would be all in a days work.

Be sure to check the current posts for updates.