A recession is in the bag, and everyone and their mother (and Wall Street CEOs) are talking about a depression, but how likely is that? Over at Intrade, there’s actually a contract on whether we’ll see a depression in 2009. We weren’t sure how they’d actually define that, since in our mind it was just some combination of black-and-white pictures and breadlines. They say: “For expiry purposes a depression is defined as a cumulative decline in GDP of more than 10.0% over four consecutive quarters. “
Anyway, the last trade was at .15, but it’s not very liquid (the current spread is 10-49). But if you’re really freaked out by the prospect of breadlines and life returning to black-and-white, here’s one way to hedge that.
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