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  • Iran – Is Something Really Up?

    Posted by Jonathan on December 23rd, 2006 (All posts by )

    Both Spook86 and Michael Ledeen suggested a few days ago that the USA might be adopting a stronger position towards Iran. Are we?

    Look at Tradesports’ price history for its AIRSTRIKE.IRAN.DEC07 contract:



    (Click the thumbnail to display a large version of this chart.)

    So what does this combination of an increase in stern American and British rhetoric, and stagnant odds in the geopolitical wagering market, mean? I think it’s clear. The rhetoric is most likely not intended as a prelude to action by us. It is intended as a substitute for action. This is business as usual and not at all encouraging.

    (See also this post.)

    Cross-posted at Midas Oracle.

    UPDATE: Chicago Boyz is an Intrade affiliate.

     

    16 Responses to “Iran – Is Something Really Up?”

    1. Robert Schwartz Says:

      OTOH, A Carrier task group is in the Persian Gulf, and there is talk of another on the way. I think we would want to have three there to attack Iran. But, the time frame would be months not days.

    2. Alex Forshaw Says:

      Hoo boy…

      I would look at oil futures markets myself. This contract is just way too thinly traded to be of much value. But an impending attack would definitely register in the oil markets, and there’s so much more at stake there… so it would have a more reliable verdict.

      http://the-ts-maven.blogspot.com

    3. Jonathan Says:

      Robert: The Dec. 2007 Intrade contract isn’t moving.

      Alex: There are hundreds of contracts offered below 30 in the various expirations. If the odds of attack rose significantly, those offers would either be pulled or taken. Anyway, price discovery doesn’t require a large number of trades.

    4. The Glittering Eye » Blog Archive » Will Iran be deterred? Says:

      […] I can’t help but think that the reality that at this point Iran’s nuclear development program is basically self-sustaining was the main factor that allowed the sanctions to go forward in the UNSC to begin with.  What’s the harm in authorizing sanctions that can’t possibly have any effect? So, what next?  As Chicago Boyz points out the increasingly stern rhetoric against Iran is probably meaningless—the Tradesports prediction on an airstrike against Iran suggests there won’t be any action of this kind in the foreseeable future. […]

    5. Alex Forshaw Says:

      Jonathan: you are correct. However, price discovery would be less expensive and therefore quicker and more likely in oil markets, if subject to more noise.

      However, there would be so much more money to be made in oil markets than in these that any trader would be trading as much as he could in oil if he came across legitimate information. On TS, you could make at best a few grand, compared to millions on oil markets.

      http://the-ts-maven.blogspot.com

    6. Lexington Green Says:

      There is no way Bush can start a third war. This is so over-determined it should not even be an issue. The material means to do it are not available. The political will to do it in the USA is nonexistent. The consequences of it on oil prices and the US economy are a price that the administration does not want to bear.

      The fact that the markets are confirming this is a source of relief to me. Jonathan and others here want the USA to embark on a war with Iran. I am glad that is not going to happen.

    7. Ginny Says:

      Jonathan, Sure, most Ledeen posts are on Iran, but a newer one’s conclusion fits with your interp of Tradespots, The Mask Comes off the Mullahs.

      Daniel Patrick Moynihan once said of Jimmy Carter that he could not distinguish between his friends and his enemies, and so he had ended by accepting his enemies’ view of the world. The same can be said of George W. Bush with regard to Iran.

    8. ElGaboGringo Says:

      The problem with the oil markets is we can’t tell to what extant the probability of an Iran strike – P(i) – is a component of price whereas tradesports is a direct measure.

      eg. If oil is at $60, where would market be if P(i) was zero? I know there are folks that think they have equations built to model supply/demand and who think they could extrapolate P(i) from these, but if anything is inefficient it would be those models, not tradesports.

    9. ElGaboGringo Says:

      So Glenn links to a Ledeen article where he says “that both Washington and London are grudgingly coming to accept the fact that Iran is waging war against us in Afghanistan and Iraq.”

      My problem with the Bush admin is that interference in Iraq by Iran and Syria (Iran’s proxy) has been obvious for years, so why have we been waiting so long to address it? Glenn himself has asked this question and he arrives at the only logical results:

      1. Iran has a deterrent we (the public) aren’t aware of

      2. The Administration is taking an approach we aren’t aware of

      M. Simon at power and control has speculated that we are choosing economic rather than military warfare and we have been tightening the economic noose for some time via banks, etc. I hope he is right.

      New Ledeen write up here:

      http://pajamasmedia.com/xpress/michaelledeen/2006/12/22/the_mask_comes_off_the_mullahs.php

    10. Jonathan Says:

      Alex: Agreed that Intrade’s contracts are too small to make real money with. However, they perform more than adequately as sources of information. Right now there’s also probably $5-10 of downside risk in crude prices, independent of Iran, so there are no easy bets.

    11. Chicago Boyz » Blog Archive » Quote of the Day Says:

      […] Iran – Is Something Really Up? […]

    12. bill Says:

      How did this market analysis do in predicting the 06 elections again?

    13. Jonathan Says:

      Bill,

      Intrade’s markets predicted better than did most nonmarket alternatives. Intrade’s markets for individual Senate races were generally accurate. Intrade’s market for Senate control, which I assume you are referring to, did not predict well, probably because a few of the Senate races were tossups until the end. But most of the nonmarket predictions were also wrong about Senate control.

    14. Karl Says:

      A story by the senior editor of the Arab Times of Kuwait this Sunday says the US will attack Iran by sea using nuclear bombs of 1 kiloton and with conventional weapons to take out oil facitites and nuclear sites etc.
      The timeframe was listed as due to Blair’s April departure and the meeting was supposedly held at the White House to plan the attack in minute detail. The only thing the Bush administration would accede to was that nukes would not be used on the main nuclear facilty because it is only 200 miles from Tehran. —Could be a plant to pressure Iran by a friendly country’s newspaper-CIA, Military Psy-ops etc., or it could be the real deal. The editor listed the source as “reliable”.
      I’ve been watching the gold market and it has held up well in spite of a decline in of prices and the dollar’s strength. Oil has hit bottom and the Saudis seem to indicate this in recent statements. Chinese papers suggest Bush is using a two tiered approach to bring Iran in line and will not attack. The economic intelligence papers think it’s a possiblity. I personally think Bush is a simpleton moron and will go for it if no other reason than to try and salvage his Iraq disaster(politically) by widening the conflict with concrete results.(whatever that would really mean could only be in the minds of Bush and Cheney.)
      The price of oil and the futures market indicate no attack will take place. Anyone know what the plan is, I want to make a million or two.(As I said, my bet now is yes,and I’ve invested accordingly)

    15. James A Pacella Says:

      About two weeks ago, a London paper “leaked” that Israel was going to use tactical nukes on Iranian nuke sites. There’s a lot of disinformation going on.

    16. Midas Oracle .ORG » Blog Archive » Iran - Is Something Really Up? Says:

      […] at Chicago Boyz, an Intrade affiliate. Read the last blog posts by Jonathan G ewirtz:How to Define EU Failure for […]