How Obama finally broke free of Clinton and McCain
By Ryan Jacobs (Politics Category Editor)
For months we’ve watched the Democratic nomination drudgingly soldier on. Now though the light at the end of the tunnel has finally appeared. As we near the end of the nominating process lets analyze what got us to this point.
At the end of April it still seemed like the fight between Clinton and Obama was a competition. McCain although out in the GOP wilderness was building his machine and raising funds. But as April turned into May a momentous shift occurred showcased by the market chart above. Around May 6-7th the entire Who will be the next President market shifted.
Clinton’s price began a slow but steady downwards slope and this price decrease boosted Obama’s standing, leading him to break free from McCain and soar ahead. Despite fallout from Reverend Wright and other political gaffes Obama’s been able to not only maintain a lead in the markets but build on it.
Oddly, the Gallup polls show a close general election race between Obama and McCain, but the markets which are asking the same question have very different results. They show what seems to be a knockout win for Obama in November. The question is why is this happening? It’s possible that Gallup responders are tinged more by ideology and don’t just take into consideration the facts but also predict who they want to be the next President. Prediction markets users don’t predict who they hope will be the next President, there predictions are based almost solely on cold hard calculations of who will be the next President. This is because they want the large payoff from predicting correct.
So what events or event caused the sudden change in the markets? If we track this back to the primaries, 2 come to mind, the May 6th Indiana and North Carolina primaries. After these as seen through the market Obama began his quick ascension, while Clinton and McCain both faltered.
So why did McCain and Clinton both falter after Indiana and North Carolina? Well, Obama won Carolina with large margins and was able to keep Clinton’s win in Indiana small, therefore he was finally able to shut her down. With Clinton all but officially done Obama could now focus on McCain. As Obama focused on McCain it became clearer and clearer who of the two was the front runner for the Presidential election and the market adjusted for this showcased by McCain’s slow downturn and Obama’s rapid ascent.
Obama now holds a major lead in the markets and once Clinton is officially gone I’d predict Obama’s price will inflate once again. The problem is when will the downturn happen? Obama can’t fly like this forever and soon enough the GOP will begin to mercilessly attack. The election this year won’t be a blowout for Obama and soon enough the markets will adjust to this, the question is when?
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Tags: 2008 presidential election, clinton, hubdub, mccain, obama, prediction market, Predictions
