One of the grand ideas of recent economics was the Efficient Markets Hypothesis. That would be the idea that people are, on average, right about the future all the time and therefore markets and market prices are good information about future events.

Which would imply that the real economy was booming up to about a year ago, housing prices were rising and would continue to do so and the future was rosy.

At which point something happened to dramatically reduce productivity and change the entire structure of demand and so on, leaving us with a couple of decades of hard slogging before prosperity returns. A curse? A punishment from God?

One of the more amusing offshoots of efficient markets has been InTrade, a place where stockbrokers and other traders get together to place bets on future events. A few months ago they predicted that Eugene Fama, the guy who came up with Efficient Markets, would win the Nobel prize. Because his ideas had been dramatically supported by reality, Wonks Anonymous is guessing.

So now Tyler Cowen informs us that these same markets are predicting the demise of the Public Option and he concludes that the Democrats are fools for not giving up on this aspect of health reform.

Tyler Cowen is entitled to his opinion but, considering the past performance of prediction markets, Wonks Anonymous thinks that supporters of the public option should be almost elated by the good news.