A bad bet? Freddie and Newt make markets cautious (Originally posted on Yahoo!'s "The Signal" Blog)

The polls have Gingrich moving towards first place with 17.6 in Real Clear Politics' latest aggregated trend, while Herman Cain is falling fast and Mitt Romney is staying steady.

The prediction markets, such as Betfair and Intrade, have Gingrich solidifying his second place standing at 15.3 percent likelihood to win the Republican nomination, but well below Romney at 68.5 percent likelihood.

Polls describe the world as it is today and prediction markets describe the world on Election Day. The chart below shows how they vary over the last 10 days and the news over Gingrich's involvement with Freddie Mac is a perfect illustration of why they differ.

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