Gambling on Sanity in D.C.: ACE Lets You Bet on When Shutdown Will End

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Great news! According to The New York Times , negotiations between Republican leaders in Congress and the White House are bearing fruit.

Friday afternoon, a delegation of Senate Republicans emerged from the White House talking up the possibility that a deal to end the federal government shutdown and raise America's debt ceiling could happen soon. After a weekend's hard negotiating, Sen. Bon Corker (R-Tenn.) went on MSNBC this morning to predict a solution to the impasse "over the next few days."

Knowledgeable sources say the plan would give the government enough money to operate through the end of January, and perhaps as far out as March. All that remains now, say the senators, is to "put the words into action and get this resolved."

But will they get it done?

'Invest' in America's Future

The latest verdict is: Maybe, possibly ... yes.

At least, that's what we hear from the number crunchers at demo.amciv.com, an innovative project from the American Civics Exchange that aims to apply Wall Street-style stockpicking to the politics of the nation.

Billing itself as "the first US-based commercial market for political futures," the American Civics Exchange aims to create a financial marketplace where investors can literally invest themselves in public policy, by buying and selling "shares" of likely developments in Washington:
  • Changes in tax policy
  • Enactment of proposed legislation
  • Issuance of regulatory decisions
  • Outcomes of major litigation
This week, the topic du jour is, of course, the odds of congressional leaders coming to their senses and ending the government shutdown. And, with the nation set ram itself headfirst into the debt ceiling on Oct. 17, the hope is that a solution to both issues will be found before the deadline. But so far, things have not been going well.

Shut Down and Wiped Out

Multiple virtual "futures contracts" traded on the ACE website -- bets that the government shutdown would end within either one, two, three, or seven days -- have all closed as total losses, their investors wiped out entirely. A contract betting on a resolution to the crisis within one to two weeks is about to expire with a total loss as well.

As of today, folks are still weighing -- and investing in -- the odds of a resolution appearing within either:
  • Two weeks to one month" from the date the shutdown began (so, through Nov. 1)
  • One to two months
  • Or more than two months

That's the bad news. The good news is that investors are starting to believe that there might be something to all the happy-talk coming out of Washington.

Rebounding from weakness over the weekend, ACE trading platform today shows rising odds that the shutdown will get resolved in relatively short order. Futures contracts betting on the crisis ending before the month is out spiked 7.9 percent this morning, to $77.50. Conversely, the price of a contract predicting the shutdown will last from one-to-two months plummeted 29.5 percent, to $26.10.

Result: As of today, ACE is showing it's about 3 times more likely that the government will end the shutdown in October, as it is that this crisis will last into November.

What Does It Mean to You?

Now, does this mean it's a hard and fast fact that the U.S. government will fix its problems in the next few days, avoid a default, and send workers back in to the office before the week is out? Not necessarily.

Investors -- on the real stock market as well as in the political market that ACE has set up -- make bad calls all the time. Case in point: Six months ago, investors thought Blackberry (BBRY) was worth more than $16 a share. Today, it sells for half that. And as you can see on the ACE website, the trail towards today's happy prediction is already littered with the expired bets of earlier optimists, who lost their "investments" as the government dithered.

But what ACE's virtual market for political futures does tell us is that a lot of voters just like you think Washington will indeed come to its senses, end the shutdown, and get back to work. And they're willing to put their money where their mouths are.

Here's hoping they're right.

Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.


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16 Comments

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echobot20

Confederate States of America Abbr. CSA
A republic formed in February, 1861, and composed of the 11 Southern states that seceded from the United States in order to preserve slavery and states' rights. It was dissolved in 1865 after being defeated in the American Civil War.

I guess they're trying a policital civil war this time.

October 15 2013 at 2:18 AM Report abuse -1 rate up rate down Reply
1 reply to echobot20's comment
pdbliz

Slavery,,,,,over turned by a Republican President... LINCOLN

Slaves bought and sold by Northern Wealthy to Democrate Plantation Owners...
Democrates have always been ,,,PARTY OF SLAVERY,,, AND,,,STILL IS,,,,,,,,,,MODERN DAY SLAVERY,,,WELFARE SYSTEM.!!!

October 15 2013 at 8:22 AM Report abuse -1 rate up rate down Reply
Nosamall

ADVANCE CONGRAULATIONS TO ALL THE GUTLESS WONDERS AND EVIL WEASELS IN CONGERSS;
FOR OPENING UP THE US GOVERNMENT WHEN IT HAPPENS AGAIN ; AS IT SHOULD HAVE NEVER BEEN CLOSED IN THE FIRST PLACE, THE AMERICAN PEOPLE ARE GOING TO REMEMBER YOU WHEN IT COMES TIME FOR YOUR RE-ELECTION TO CHIEF FOX WATCHER FOR YOUR DISTRICT HEN HOUSE, A GOOD NUMBER OF YOU WILL NOT BE RETURNING IN 2015, SAYS THIS CHICKEN WATCHER!!!!!!!!!!!!!!!!!!!!!!!!

October 14 2013 at 9:29 PM Report abuse +2 rate up rate down Reply
1 reply to Nosamall's comment
pdbliz

I AM GOING TO REMEMBER,,,BOTH PARTIES.!!!!!!
EITHER PARTY COULD HAVE OPEN GOVERMENT BACK UP...

BUT,,IT WAS ONE PARTY THAT ,,,HURT THE PEOPLE IN GENERAL...
CLOSED THE NATIONAL PARKS FOR SPITE TO THE PEOPLE...

October 15 2013 at 8:24 AM Report abuse rate up rate down Reply
pdbliz

I seen the so called,,,,TEA PARTY IS GROWING IN NUMBERS.!!!!!
Larmar Alexander of Tennessee,,,,,,Republican....is going to be voted out.!!!
HE IS SAME AS A DEMOCRATE.......NUTS.!!!!

October 14 2013 at 8:22 PM Report abuse rate up rate down Reply
1 reply to pdbliz's comment
attyacampbell

I'll believe it when I see it.

October 14 2013 at 9:31 PM Report abuse +1 rate up rate down Reply
1 reply to attyacampbell's comment
pdbliz

I hope it is true......I have heard a lot of stories about him from campers at Cades Cove......Alexender has control over the riding stables and the food stands there.....The man that was incharge for 30 years,,,got booted out by Alexenders cronies... All about money........Cades Cove is a goverment shame anyway... Tons of rangers,,but,,you never see them in the Campgrounds...No phone service......But,,it still is a nice place to camp ..........

October 15 2013 at 8:29 AM Report abuse rate up rate down
pdbliz

Got my truck filled up with gas,,,camper trailer attached......
Headed up the Blue Ridge Parkway.......SHIUT DOWN OR OPEN,,,I CARE LESS..
Headed out to enjoy myself.......not going to worry either way...
But,,I will spread the word..........DEMOCRATES ARE PARTY OF GLOOM AND DOOM...HA!!!

October 14 2013 at 8:20 PM Report abuse rate up rate down Reply
Steve

Only Miley can end the shutdown! She's a real 'tongue-wagger!'

October 14 2013 at 6:51 PM Report abuse rate up rate down Reply
Skai

if it doesn't pay divs, i'm not interested!

October 14 2013 at 4:20 PM Report abuse +1 rate up rate down Reply
teaparty2implode

WOW,......THE KOCH FAMILY POSTERS WERE HERE EXACTLY AN HOUR AGO. INTERESTING...........

October 14 2013 at 3:31 PM Report abuse rate up rate down Reply
sillidazi11

Is it harder to open up the longer you are shut down? I am just thinking the longer we are shut down the more it is going to cost to reopen and get started again. At this point I almost do not care who it is, just get your butts in gear. Please stop wasting our time with the blame game and get America back on her feet. Are all of these government workers getting paid for all of this blame game and no resolution? If they are, maybe a month with out pay will get their attention. Lets get going and get back to being a great nation!

October 14 2013 at 3:29 PM Report abuse +1 rate up rate down Reply
bolten2

Thirteen trillion of debt. How much do they borrow to pay only the interest? Might as well default cant ever pay that off.

October 14 2013 at 1:43 PM Report abuse -5 rate up rate down Reply
1 reply to bolten2's comment
teaparty2implode

Most of that debt is from Bush..........

October 14 2013 at 3:32 PM Report abuse +2 rate up rate down Reply
1 reply to teaparty2implode's comment
pdbliz

I KEEP TELLING YOU.......BUSH IS GONE,,,!!!!!

October 14 2013 at 8:21 PM Report abuse -1 rate up rate down
progressivehoax

Liberal Democrats don't worry, they're all on the Government dole anyway.

October 14 2013 at 1:30 PM Report abuse -7 rate up rate down Reply
1 reply to progressivehoax's comment
teaparty2implode

You're insulting the republican voter base.........LMAO!!!!!!!!!!!!!!!!!

October 14 2013 at 3:35 PM Report abuse -1 rate up rate down Reply