President Obama

Ray Fair is Emily Oster's dad, and has a well-known model called appropriately the Fair Model. Basically he predicts the outcome of Presidential elections based just on three variables: GDP Growth, Inflation and "Good News." I think other variables are added, as I also see "War" in one of the tables. But the economic indicators are the strongest is my point. What Fair has consistently found is that the single most important prediction of an outcome of the Presidential election is GDP growth and inflation. The original paper which presented the model was a 1978 Review of Economics & Statistics piece, and every election he updates it - sometimes publishing the new results, sometimes not.

Well, my sense has always been that because of Fair's model being so awesomely predictive of the correct Presidential victor - namely, that during difficult economic times, incumbent parties lose and during strong economic times, incumbent parties win, regardless of anything else going on - that there was no way the Republicans could win. The housing recession began last year, and things felt very shaky with inflation starting to rise and job insecurities increasing. Then inTrade started with a Democratic contract of 60 all the way back to January, even before anyone knew who the actual candidates were going to be on either party.

Then things started to narrow, until shortly after the RNC, McCain's contract for the first time actually showed him winning. Wow, right? Palin is that awesome I guess. Then last week, we learned that there is a time bomb set in the vaults of about 50,000 banks and hedge funds about to go off (some already have gone off), and only Jack Bauer (or Hank Paulson, whatever you want to call him) can find them all and defuse them in time. Then we learned the contracts at inTrade don't make any sense, and suggest someone has been buying high volume McCain contracts - some total degenerate gambler it seems like. So what now? Today I look at what do I see? Obama is back up to 60. The whole Palin madness appears to have been an anamoly, and the degenerate gambler appears to have gone home to sleep it off. So, I'm back to believing in the Fair Model, and seeing how McCain has responded to the financial problems, I can't say I'm disappointed with the possibility of President Obama. Senator McCain has completely unnerved me, and I'm not sure I like the idea of him at the head of a sinking ship.