Ubber finance blogger Barry Ritholtz believes in magic. He believes that, with more volumes on the event derivative markets, comes the Omniscience -capital O.

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Our good friend Barry Ritholtz.has persuaded himself that our real-money prediction markets suffer from an irremediable and fatal problem: liquidity on political event derivative markets is too thin for smart Wall Street people like him to take their market-generated probabilities seriously. Barry Ritholtz is keen to tout oranges–-apples comparisons: the NYSE volume versus the Obama–-Clinton volume at InTrade. It’-s a bullshit argument, but he managed to persuade some gullible journalists writing for some clueless mainstream media that thin liquidity was responsible for the New Hampshire upset —-and else.

Barry, if you had 1,000,000,000 trades on the New Hampshire prediction market, you’-d still have an inaccurate prediction. The polls were wrong, and there’-s nothing …- NOTHING…- that the InTrade and BetFair traders could have done to get this election right. Get over it, Barry. Traders are not magicians. :-D

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[For why the polls were wrong, see: The New York Times, Zogby, Rasmussen, Gallup...]

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