A Gambler’s Take on the US Election
Posted by Possum Comitatus on June 19, 2008
By The Political Tipster
One of the benefits of living in the UK and commentating on the US Election is that I am actually able to back up my views with hard cash. In my case I have already made a decent return of 24% on my model portfolio since September and won over £1,000 (with £500 of that already hedged) on other accounts. Now, I’ll admit that most of that comes from buying McCain in early September when he was around 20/1 to win the Republican nomination. However, I believe that my take on the election is better than the ‘conventional wisdom’ of the punditry or the so-called ‘wisdom of crowds’ that the betting markets like to kid themselves that they have. Although my belief, expressed on my web-log (www.politicaltipster.com) immediately after ‘Wrightgate’ that Obama only had a 10% chance of winning this year’s election was probably too extreme, I believe that McCain has about a 70% chance of winning with the plausible outcomes, excluding some scandal or tragedy, ranging from a McCain landslide to a narrow Obama victory.
Now Obama does have several advantages. The American economy is in extremely poor shape while in the longer term the American education system is mediocre and America’s competitive advantage is being sapped by wasteful spending in some areas and underinvestment in others. Although the thirty year period of global economic re-adjustment that has led to stagnant wages, as an unfortunate by-product of lower inflation, may have reached its peak there is a sense that the idea of ‘drowning government in a bathtub’, as advocated by the tax activist Grover Norquist, is over. Indeed, the conservative journal National Review Online railed against what it termed as ‘no government anarchism’ after one Republican Presidential debate last year. Obama has youth, the groundbreaking nature of his candidacy and an active bottom up organisation on his side. In contrast McCain’s organisation is pathetic and his staff have neither strategy, vision or organisation. Indeed, McCain’s staff seem to be trying him to get him to act like the dog in James Thurber’s short story, afraid to attack Obama because of a perceived backlash, afraid to move to the centre because that would offend the ‘base’ and most importantly afraid of mentioning the war in Iraq, even though McCain actually leads on this issue in the polls. There is also Bush’s desperate unpopularity to contend with as well.
On the other hand you could argue that on any objective reading on the contest McCain is the better candidate. While Obama trundled around in Chicago and Illinois local politics, getting his hands dirty and achieving little, few would dispute that McCain has a record of achievement, both as a War Hero and as someone who has been involved with many huge events, such as his support for the war in Kosovo, campaign finance reform, the compromise on judges that enabled the Senate to function and most famously the ‘surge’ strategy in Iraq. He has a large following among independents and some conservative minded Democrats, as evidenced by the endorsement of Joe Lieberman last December. In contrast, not only is Obama inexperienced but he also seems to have a worldview that is fundamentally at odds with the majority of Americans. His has made repeated number of gaffes such as; his assertion that Iran does not post a threat, that people are ‘clinging to guns and religion’ and his longstanding association with characters such as William Ayers, Jeremiah Wright and others raise serious questions about the type of foreign policy an Obama administration would pursue.
In my mind this election could either go one of two ways; firstly it could be a repeat of 1972 where Richard Nixon won a landslide victory over George McGovern or it could be a repeat of 1976 where Gerald Ford managed to pull back from a thirty point deficit to nearly shock the nation by beating Jimmy Carter. At the moment the majority of the parallels seem to be with the Ford-Carter contest of ’76. However, when one factors in the idea that Bush isn’t quite as unpopular as Nixon (at least not yet), the fact that the experience of the Carter administration is still fresh in people’s minds and that McCain still has time to return to the centre on domestic issues, go on the offensive over Iraq, reorganise his campaign staff or to surprise everyone by picking Joe Lieberman as his running mate (available at a generous 20/1 from Ladbrokes), an outcome that is closer to the Nixon landslide is definitely possible. This makes a McCain victory a value bet.
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