Iowa: Prediction market picks winners (Updated)
The intrade.com prediction market has pegged the outcome of the Iowa caucuses for the Republicans (click the image for a larger view):
…and the Democrats (click the image for a larger view):
Intrade contracts trade between 0 and 100 so you can think of the price at any time to be the percentage probability of that event occurring. If the Obama Iowa caucus contract is trading at 61, it means that traders gave him a 61% chance of winning the caucus. Holders of those contracts will make a 39 cent profit per share if that happens.
On the other hand, if Edwards’ Iowa caucus contract is trading at 16, it means that traders gave him a 16% chance of winning the caucus. And/But holders of those contracts will make a 84 cent profit per share if that happens.
UPDATE: First it was Kucinich throwing his support behind Obama in Iowa; now there are rumors that Richardson and Biden want their supporters to do the same if they cannot reach the magic 15% threshhold of viability.
A couple of further thoughts:
If Edwards finishes third, or even second behind Hillary, I think it’s the beginning of the end of his campaign. He needs to win Iowa to meet expectations. Shy of that, he needs to beat Hillary so that he can have a reasonable shot at winning New Hampshire or finishing second to Obama there. If he cannot do that in New Hampshire, the combined political judgement of the chattering classes will drown out his message. It’s not right that they can do that to him (or any other Democrat) but — to use a banished phrase — it is what it is.
If Huckabee wins Iowa, look for McCain to surge in New Hampshire. If McCain wins there, Romney is, for all intents and purposes, finished. If Thompson drops out after Iowa and throws his support to McCain before South Carolina, then McCain has to be considered the favorite there and also the favorite to get the nomination. He is, after all, the only grown-up in the Republican race for the nomination. And that ain’t saying much.
Pass the popcorn!