At some point, China, India, and the other emerging countries with managed currencies will find their economies are getting too far out of line and may decide to give up their currency pegs. That means they will have less need to accumulate U.S. dollars. And lower demand for U.S. money could bring the world closer than ever to the long-feared run on the U.S. dollar. Similarly, there will be pressures on U.S. long-term interest rates to rise sharply since foreign countries will have relatively lower U.S. dollar reserves to plow into U.S. treasuries.

Things appear to be different from the 2001-2002 period. It is unlikely the same result — the mildest of recessions — will be the result. This time around the Fed has less freedom of action. The result will likely be a more substantial downturn. The stream of economic reports could be getting a lot uglier from here on in.

But when I looked at the possibility of buying contracts, the native hue of resolution was sicklied o’er. Not with the pale cast of thought but disappointment over the depth of the market. It’s difficult to place a bet of any significance.

The current ask price is 36.2. But there is only one contract on the order book and given a point equals 10 cents, it can be purchased for $3.62. At the next ask price of 36.3, there are 5 contracts available, costing $18.20 in total. Indeed, one can buy all of the 200 or so contracts offered at ask prices up to 39.0 for less than $800.

Then there is the warning in the rules section on the need to check the legality of trading on Intrade.com in your country of residence. If there are any doubts, “then you should not use our service until you take suitable professional advice,” says the website.

That’s a shame. It could have been fun playing these prediction markets. Furthermore, the ones with low volumes, like the recession market, will not necessarily live up to the findings from academic studies that prediction markets provide better forecasts than opinion polls.

Well here are a couple of things happening right now with the US economy that are worth considering. First, a good website with a US debt clock is http://zfacts.com/p/461.html. This is one clock worth watching. As of 4:30pm on May 2, 2008, total US government debt was $9,345 trillion. This is approaching one-fifth of the GDP of the entire planet. In one minute, this debt increased by $1.3 million. By comparison, total market capital for all companies on the Canadian Business Investor 500 this year was only $1.7 trillion.

Secondly, in the table below, the semi-annual Institutional Investor Country Credit survey shows that the U.S credit rating has slid downward in the last six months. This is a dangerous combination of rising debt ($16.7 million in the last 13 minutes) and an increased concern about the ability to pay.