Eamonn Fitzgerald's Rainy Day

What a peculiar country Ireland is. Once renowned for its saints and scholars, it went on to become famous for its exiles and eccentrics and then for its poets and playwrights. Now it seems to have become a byword for gamblers and speculators. In the past week, hardly a news outlet around the world — here and here — has not reported on the Irish bookmaker Paddy Power and his betting action on who'll be the next Pope. Then there's Intrade.

The Intrade fundamentals are the same as Paddy Power's, but the focus is different. The Power operation concentrates on horse racing and football, but betting on novelties such as the papacy is a bit of fun that attracts publicity. Intrade, on the other hand, is a Dublin-based online futures market used by more than 50,000 speculators worldwide. Their interests are more specific, their spending power is greater and their collective wisdom is awesome to behold. Remember last year's US presidential election? All those polls and demographic shifts and overpaid pundits who told us the race was too close to call. Down to the line it was going to go. Right? However, those who watched the Intrade market during the campaign saw the speculators uniformly putting their money on a Bush victory and, most impressively of all, the weekend before the election, the traders correctly called the winner in every one of the 50 states.

Because nothing is sacred, it's expected that Intrade speculators will spend at least $1 million on futures contracts tied to the election of the next Pope — an Italian Pope, Dionigi Tettamanzi of Milan to be precise. The futures contract that pays off in the event any Italian wins was trading at a few hours ago at 35.0, which means the traders gave Italy a 35 percent chance, followed by Germany at 18, meaning Cardinal Joseph Ratzinger. Let's see if the Holy Spirit can confound the speculators. If Intrade gets this one right, though, expect the market to rule and Ireland to become the new Las Vegas.

For an insight into the Intrade phenomenon, Rainy Day recommends The Wisdom of Crowds by James Surowiecki of The New Yorker. Surowiecki says that large groups of people are smarter than an elite few, no matter how brilliant. When it comes to solving problems, making decisions and predicting the future, the crowds have it. Next week, we'll see if picking popes can be added to that list.