Friday, March 5, 2010

Paterson Probably Staying Put

As another disastrous week for NY's disgraced governor comes to a close, a majority of New Yorkers are now telling pollsters they want David Paterson to resign. But political prediction market traders at Intrade are growing more confident that the accidental governor isn't going anywhere.

As of this afternoon, Intrade gives Paterson a 55% chance of departing by July 1. The likelihood of him leaving office is down 18 points from yesterday's close, and 25 points from a high of 80% earlier in the week. While fewer than 400 shares have been traded so far, volume has picked up steadily during the last few days of the scandal.

Some pundits are crediting Al Sharpton's show of support for Paterson's improving prospects. Last night, at the second summit at Sylvia's restaurant since last Saturday, Al Sharpton and a number of prominent black politicians said that Paterson should stay put.

"Most of those in the room tonight strongly felt that the Governor should continue," said Sharpton.

Chris Cillizza, author of "The Fix" blog at the Washington Post, seized on Sharpton's statement in offering advice to a reader in a web chat today on whether to buy into an office pool on Paterson's resignation.

"I think he bought himself a little time when leading African-American leaders decided not to call for his resignation last night," said Cillizza. "Will paterson resign ultimately? I think it depends on what else -- if anything -- the New York Times has on him."

The Bottom Line - Traders would be wise to take Cillizza's advice. Barring another bombshell from the Times, the chance of Paterson leaving will likely continue to decline by the day, at least until Andrew Cuomo announces the results of his investigation.

Although increasingly isolated, Paterson is already trying to turn the page. He has political events planned for this evening and several scheduled for early next week. To that end, he appears determined to follow in the footsteps of the obstinate Mark Sanford and legendarily resilient Rod Blagojevich.

Whether another article, leak, or slew of staff resignations will ultimately force his hand, of course, remains unclear. But as long as he's able to buy time, traders should probably not buy the Paterson resignation contract.

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