Quiet! The spirits are about to speak.
Friendly spirits? Eh, who cares. The real question is, are they smart spirits.
Every election season, as we sift through the polls looking for portents of the future, the press eventually gets around to looking at those polls that come with dollar signs attached. While we don't allow flat out gambling on the outcome of elections as they do on the other side of the pond (surprising, since the feverish spread of gambling seems to be the only form of revenue which wins the Republican stamp of approval these days), there are some forms of "outcome investment" which are allowed.
Among these is the Iowa Electronic Markets. Intended as a learning environment for would-be futures traders, the IEM allows you to risk up to $500 of real world bucks in your quest to grab dollars from those whose political foresight is less astute than your own.
Many times, this kind of market has been looked on as a more reliable poll than those generated by phone call or mouse click, because those involved have a vested interest in keeping abreast of news, talking to their neighbors, etc.
So what can the massive power of the market, focused through the lens of human greed, resolve in our immediate future? On the Democratic side, it looks like this.
This shows a market where Clinton and Obama started off nearly tied. Initially, the "rest of field" option was relatively high, representing the early hopes that Gore would enter the race. You can still see a blip of Gore optimism as recently as the Nobel announcements. But the biggest trend since the start of the market has been the broadening of the gap between Clinton and Obama. In the last month, that's started to reverse, but even today you'd have to pay nearly $0.67 for a share of Clinton that would be worth $1.00 when the nomination is awarded. Edwards shares seem mired in the sub-dime basement.
The Democratic results look like a model of stability when compared to that other race.
What the Republican race shows is an undying conviction that there has to be someone better out there. First the "rest of field" shares race to the top in advance of Freddie Thompson's entry, but as Thompson snoozes aware the campaign season his shares plummet. Then ROF runs up again in advance of issuing Huckabee shares, only to have those start a downward trend that echoes Fred. McCain, who started the season tied for first, drops down into the bargain basement, with only a slight uptick from the recent run of endorsements (but then, we haven't yet had time to see Joementum kick in). In the meantime, Rudy and Willard cruise along, almost unaffected by the drama of the "anybody but them" crowd looking for an alternative.
So, with the start of the primaries only a couple of weeks off, how good a job do these charts do at predicting where things will go from here? Well, if the chaos reflected in the Republican chart hasn't already clued you in, here's a chart from 2004.
Only a few days before the Iowa caucuses last time around, you could have picked up shares of Kerry for far less than you'd pay for Edwards today.
The record indicates that, at least in the case of the primaries, the IEM has been far more reactive than predictive.