It seemed like Delong interpreted the mere suggestion of 10% interest rates as a veiled attack on the Obama administration. That would explain the unfairly harsh and pedantic manner of his post.
I think that Delong is right to be sensitive on this subject. Trading in Treasuries has recently seemed a bit aggressive and not altogether related to inflation expectations, at least not in an innocent, passive sense.
Anyway, the apparent probabilities could also be explained by the same structural forces that sometimes cause the longshot bias. (not formal risk aversion)
