Since the summer, Salon has chronicled the trading patterns on the Iowa Electronic Markets, the real-money futures system on which traders buy and sell either John Kerry or President Bush shares in an effort to predict the winner of the presidential race. For a while now, we've been puzzled by the traders' love of Bush shares; even after the president's less-than-stellar debate performances, traders on the market were putting their money on Bush's side, giving him at times as much as 70 percent odds of winning.
Since yesterday, though, that's changed. By a hair, the IEM is now on Kerry's side. As of noon EST, traders were giving Kerry about a 53 percent chance to win, with Bush at 47 percent.
Especially interesting is the sharp plunge in recent days in traders' faith that Bush can win with greater than 52 percent of the popular vote. Before the first debate, traders put the odds of Bush doing that at more than 50 percent, and as late as last week the IEM thought there was at least a 25 percent chance that Bush would win big. Today, though, a share that pays off only if Bush wins big is selling at 13 cents (i.e., there's a 13 percent chance Bush will win with more than 52 percent). Shares saying that Kerry will win big, meanwhile, are selling for 19 cents each.
Kerry supporters would be wise not to become too cocky about this news, however. In 2000, the IEM said Bush would win the popular vote. We know how that turned out.