Mitt Romney is considered the likely winner of each one of the first five primary contests, but the judgment of the markets in two of the first three–Iowa and South Carolina–is extremely close. As the likely winner of the first five caucuses and primaries, Romney is, not surprisingly, also the likely winner of the Republican nomination. As of today, the markets give Romney about a 2 out of 3 chance of heading up the Republican ticket in November.
All indicators in the debt crisis pointed to a political dustup that presented very few long-term, real-word consequences for things that genuinely concern most people. Yet press coverage of the crisis often lost sight of both the kinds of outcomes that would really matter in people's lives, and which indicators people could productively consult to learn of likely outcomes. And, same as politics, ordinary citizens should keep in mind a simple caveat lector disclaimer: Always think about what you really want to know–and about what the information you are seeing is actually telling you.
Check at the attatched chart to see how the U.S. had increased short term borrowing costs at the height of last summer's debt cieling crisis. But, long term borrowing costs continued to fall through the entire event.
Herman Cain is rising in the polls of Republican primary voters, but prediction markets are not buying into the Cain surge. On Wednesday evening, MSNBC led its web page with the breaking news that the network's latest poll showed Cain atop the GOP presidential field, with 27 percent support; Romney was a close second at 23 percent, and Rick Perry placed third with 16 percent.
Yet the prediction markets, where users can buy and sell contracts on who will ultimately win the Republican nomination, are still very skeptical of a Cain victory. The real-time markets assessing the likelihood of the Republican nomination still have Romney enjoying a commanding 65.7 percent lead, with Perry trailing at 12.5 percent and Cain at 10.1 percent. Here is a look at how the leaders have progressed over the last few weeks:
Polls are important. You see a lot of them during a campaign season. The question is, what do they really mean?
The quoted margin of errors are large and significant. And, the real error is much larger and more significant than the quote margin of error!
Yet, despite this margin of error and the daily fluctuations, polls are a very meaningful source of information in understanding and predicting an election. You just need to be clear on what a poll means and how best to use it.
The obvious takeaway at this early stage of the primary cycle is that the "generic Republican" is a more effective candidate than any specific Republican. In part, that's because there's a bit of a built-in bias in polling for more abstract forms of political allegiance. In these surveys, respondents are registering their reactions to Obama as a known political quantity, with a full array of perceived electoral strengths and weaknesses. Yet for the no-name Republican, "Respondents get to project the person they think is the most electable actual Republican or even an imaginary Republican that is not in the race," as Wharton economist Justin Wolfers has observed.>
Despite the always-long odds against a Christie run, an actual Christie candidacy would likely create a big impact on the battle for the GOP nomination; even without entering the race, the markets forecast that he had a 10 percent likelihood of winning the nomination. Where did that 10 percent go when confirmed he was not running?
The short answer, shown in the chart above, is that Mitt Romney got most of it, and he got it fast. As Christie quickly headed toward a 1 percent likelihood of attaining the nomination, Romney jumped approximately 10 percentage points–from 45.3 percent to 55.3 percent likelihood, where he is right now. Many people saw Christie as the last major new Romney adversary, and his non-entry may be close the door on any other late challenge to the current field.
A look at the race for the Republican nomination just before and after Christie dropped out:
Lawmakers in Pennsylvania are considering switching the way the state divides up its electoral votes before the 2012 election. Pennsylvania now gives all of its electoral votes to the winner of the popular vote–the same method that 47 of the other 49 states also use.
Some meaningful things could happen if Pennsylvania chooses the new method under consideration. In 2008, Obama received 55 percent of Pennsylvania's vote and all of the crucial swing state's 21 electoral votes; under the new plan he would have received just 11 of the 21 electoral votes. Since Democratic candidates tend to win their districts by larger margins than the Republicans, a proportional system in more populous states could work to the GOP's advantage in presidential races. There's a strong likelihood that Democratic presidential candidates could win the state's popular vote by rolling up higher margins of victory in dense, urban congressional districts and get less than half of the state's electoral votes.
Click on the attachment below to see how your state matches up between percentage of population and percentage of popular vote.
If Christie runs, he will immediately be a top contender. Right now the prediction markets give him a 24.5 percent chance to run for President and an 8.0 percent chance to win the Republican nomination. However, should he proceed with a run, my projections suggest that the prediction markets would instantly grant him a 25 to 35 percent likelihood of gaining the nomination.
If Christie does not run, he may lose his moment. The markets are reflecting growing unease in the Republican party over the current crop of candidates. The reason that Romney did not gain all of Perry's strength is that the Republicans are looking for someone to take him on for the nomination. If Christie does not grab this chance, someone else will–former Alaska Gov. Sarah Palin, for instance, or some other dark horse contender. If Perry continues to falter–and if Christie passes on a 2012 presidential run–the predictions markets suggest that GOP field is still fairly wide open.
It just gets worse and worse for Govenor Perry of Texas. As the dust settles from Thursday's debate Perry has slid from 38.5 percent likely to be the Republican nominee to 26.4 percent (as of this reposting on Sunday morning):
Every day that Governor Christie of New Jersey flirts with federal office his likelihood of winning reelection is diminished. In recent months he has become agnostic on teaching evolution, he vetoed state funding for family planning and he has pulled state money out of projects designed to remediate the impact of global warming, even though has previously admitted that climate change is a real problem associated with human activity. All of these are going to hurt him when he runs for reelection, but if he stops flirting with the national Republican Party now, he still has a chance at reelection.
Every day that Christie focuses on New Jersey his likelihood of winning a federal office is diminished. He is a Republican in a Democratic state. He cannot make the policy that wins affection in New Jersey and stay friends with the national Republican Party.
He has a choice to make and my advice is to make that choice soon. The longer he tries to be Governor of New Jersey and viable federal office Republican the less likely he is to succeed at either of them!