Transparent updating

Following Prof. Caplan, but I’m going to be slightly easier on the bailout. Assuming a bailout happens, which is likely given trading at Intrade, if unemployment stays below 7.8% ((this is about the 20 year high)), I’ll take that as evidence the bailout had no effect. I’m using the same reasoning as the Professor; if we’re as close to disaster as bailout supporters suggest, you’d expect unusually high unemployment rates, bailout or no. Otherwise, I’ll take unemployment higher than 7.8% to be evidence that the bailouts helped.

UPDATE: Catching myself in a potential gotcha. If unemployment goes above 7.8% before a bailout passes or is implemented, I’ll still take that as evidence that the bailout matters. The expectation of a bailout might help just as much as the actual implementation of one.