Wednesday, September 1, 2010

I Can See November from My House...

The Iowa Electronic Markets (where real people bet real money on all sorts of things, including politics) has options for sale to bet on the outcome of the November 2010 mid-terms.  The chart at right shows the price for three different options contracts.  The higher the price, the more likely the market thinks that outcome is; the lower the price, the less likely.

What makes this market particularly interesting is two things: first, there's real money on it; second, its track record of prediction is quite good (especially compared to the talking heads and print pundits).  What this chart shows is that the players in the Iowa Electronic Markets think that it's pretty much a slam dunk (80/20) that the Republicans are going to get control of the House.  That's a huge margin as these political things go.

On the other hand, the chart at left shows very similar odds for the Democrats to retain control of the Senate.  The odds have improved over the most recent few days, but only by a little. 

I'm going to be watching this graph as November approaches – and hoping that the lines cross beforehand.  It's not that I'm particularly enamored of the Republicans – to me, the current crop of Republican Senators is only marginally more attractive than the Democratic variety.  Rather, I'm greatly enamored of total gridlock – if the Republicans somehow managed to control both the House and the Senate for the last two years of Obama's term, then Obama's agenda will be greatly impeded.  That's the attractive outcome for me!

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