Lib Dems need 37%-38% for Nick Clegg to Gain Plurality

Yesterday, I explored some election scenarios in the U.K and found out that there is significant chance that the Liberal Democrats can beat Labour in seats if they lose enough support. If the Lib Dems have more seats than Labour, Nick Clegg could possibly become Prime Minister through a Lib-Lab coalition. Today, I analyze that scenario more in depth.

An interesting thing to note about most election scenarios is that there is a finite number of them. I really doubt any party can get above 45%, I also think the floor for Labour support has to be around 20%-25% and it can almost never go below that number. Labour has been around so long that they have to have a hardcore base much like Bush did when his approval rating plummeted but never went below 30%-33%.

Once again, all the scenarios have votes for others constant at 10%. Hypothetical polling in green consists of Lib Dems beating Labour in seats and the polling in in yellow consists of the Lib Dems gaining a plurality of seats.



What's interesting is that we could see the Lib Dems have more seats than Labour with 36% of the vote and the Tories at 33%. As long as the Lib Dems have the highest percentage of the national vote, they could claim a mandate to lead the next government.

As the Lib Dems rise above 36%, they slowly squeeze out the possibility of a Conservative plurality in seats. This is because there simply isn't any more room for the Conservatives to grow. 36%-38% is the electabililty threshold that Nick Clegg needs to reach to truly convince the British public that the Lib Dems can win the election. Right now, he isn't too far away from that goal polling around 30%-33%. But as it stands right now, all he is doing is preventing the Tories from reaching the majority they so desperately want. With the added possibility that the U.K might still have Labour stay in power.

The key to a Lib Dem victory right now is too crush Labour immediately. Get them out of the equation. Make sure that a vote for the Lib Dems is not a vote for Labour. Because if that is the case, the Conservatives could retain the mantle of Change.

Multiple UK Election Scenarios

The 2nd debate on foreign policy is today and the Lib Dems are now feeling the heat from Conservatives. The Daily Telegraph, has published this story on Nick Clegg which shows that he received money from political donors into one of his personal accounts. This blog post from the Independent seems to think that it is not that big of a deal. Here are some graphs using a swing calculator to illustrate what I think are some highly likely scenarios for the future. 

Scenario A) Conservative Resurgence
David Cameron wins the foreign policy debate and is able to bounce back and keep the Lib Dems from rising above 30%. The Lib Dems continue lose votes to the Conservatives but continue to gain from a Labour party that shrinks to it's hardcore base.

What's unfortunate in this situation for the Lib Dems is that they never have more than 110 seats. The good news for the Conservatives is that they can get a plurality of seats with 34% and a majority with around 37%-38% of the vote. This might be the best path for a Conservative victory at this point. The Lib Dem surge has stabilized by around 30%. Labour is in 3rd but they are still relevant. Convince the electorate that they aren't even a factor anymore and are nothing but a lame duck government.

The Tories still have two big advantages over the Lib Dems, money and organization. Both can help propel David Cameron back to the lead after a surge in the polls.

Scenario B) Lib Dems come in 1st but Tories come in close 2nd
In this scenario the Lib Dems continue to rise in the polls but the Tories are able to separate themselves from Labour. The Tories continue to be competitive with the Lib Dems but ultimately come 2nd.

This scenario, which does give the Conservatives a plurality but never a majority can go two ways, if the Lib Dems are still 2nd in seats then I think David Cameron will form either a minority government or with a coalition government with the Lib Dems. If the Lib Dems win more seats than Labour, then I think a Lib-Lab coalition with Nick Clegg as Prime Minister could be in order. Gordon Brown seems open to the idea of a Lib-Lab alliance and the Lib Dems are most closely aligned ideologically with Labour than the Conservatives. This might also be favored by the public because it puts the party that got first in votes at the head of government.

Conclusion
Under these two scenarios the chances of hung parliament are great. Both the Lib Dems and the Conservatives have to beat the other two handedly in order to win an outright majority. The Conservatives less so than the Lib Dems.

If Nick Clegg wants to become Prime Minister even as the head of a coalition, he will have to beat both parties. David Cameron can probably do it by coming in a close 2nd with Labour still on life support. Ultimately the path to victory is a lot easier for the Conservatives than the Lib Dems but this all depends on Labour doing very poorly.

Why Lib Dems Face Uphill Battle

Here is a little chart I made showing the unfairness of the British electoral system in favor of the Labour party. This chart was made using a Universal Swing Calculator.

In this chart the Others category are kept constant at 10% and the spread between Labour and the Conservatives is kept constant at 5%.


What's amazing is that as long as Labour stays within 5% of the Conservatives, the Lib Dem surge will do nothing to prevent a Labour plurality in seats until they hit 37%. The key for the Conservatives is to not lose any more votes to the Lib Dems and maintain a lead over Labour. Tomorrow, I'll go over some other election scenarios.

Light Posting in the Near Future

It's getting to that part of the semester where I have to focus on finals. I will not be able to post as often these next two to three weeks.

The election in Britain is getting a lot action now and I can understand why no one thinks the Liberal Democrats can win a majority. For a candidate who is very much like President Obama, his campaign is nothing compared to the organizational behemoth that crushed McCain/Palin. This isn't really his fault, no one gave him a chance a month ago. He is having his Iowa moment 17 days before the national election. Obama had his almost a year before the election, and then had one of the two major parties in the United States to run a campaign.

The Tories might be a bargain right now at 33% to gain a majority if they can bounce back to previous levels, but I don't know how they can recover. Lately, I have been reading Reminiscences of a Stock Operator. It has some interesting insight on trading and some of it can be applied to politics as well.

prices, like everything else, move along the line of least resistance. They will do whatever comes easiest, therefore they will go up if there is less resistance to an advance than to a decline; and vice versa.

Is a Liberal Democrat surge more likely than a Conservative one? From the looks of things, Labour seems finished, they seem the most likely to decline. Their support could swing over to the Liberal Democrats as they are the most ideologically similar but that works both ways.

The last debate served as the catalyst for the last Liberal Democrat surge. With two debates to go, one on foreign policy and one on the economy. Another surge could be possible. Both for Conservatives and the Liberal Democrats. But I got to say, I really feel the Lib Dems might be on the verge of something amazing here.

Forget the Tories, I'm Betting on the Lib Dems

Well, my analysis of the the U.K Election and the Conservatives winning rested on a single premise, that the 1st U.K debate would not fundamentally change the election. I was wrong, it has. Nick Clegg, the leader of the Liberal Democrat party won the first debate and has shaken up the entire election. The Labour party is now arguably in 3rd place with the Liberal Democrats in 2nd and the Conservatives still in 1st. All basically within the margin of error.

It seems that David Cameron and the Conservatives were right in picking the Change message but were wrong in assuming that the electorate would see them as the party that represents that message.

Pollster	Date	Conservatives	Liberal Democrats	Labour
YouGov	4/14/2010	41%	18%	32%
YouGov	4/15/2010	37%	22%	31%
ICM	4/15/2010	34%	27%	29%
ComRes	4/16/2010	35%	24%	28%
YouGov	4/16/2010	33%	30%	28%
ComRes	4/17/2010	31%	29%	27%
BPIX	4/17/2010	31%	32%	28%

The Liberal Democrats seem to be taking more voters from the Conservatives than Labour, the Liberal Democrats are taking votes from both parties as they continue to attack each other. Voters seem to be disinterested in both parties and do not like David Cameron. The only thing going for David Cameron is that he is not Gordon Brown.

The 1st debate helped establish Nick Clegg as an equal candidate against David Cameron and Gordon Brown. An alternative to the status quo of just the Labour Party against the Conservative Party. With his recent rise in the polls, a vote for the Liberal Democrats might not feel wasted, which is an important hurdle for any candidate. Now voters know that there indeed might be an alternative that has a chance of winning. Here is an interesting analysis of the debate by pollster Frank Luntz.

Nick Clegg also has the advantage of being fresh on the political scene and hasn’t been stereotyped as much as the other candidates. Labour has known for a long time that David Cameron was their main opposition and has done all the dirty work that the Liberal Democrats need to hurt the alternative candidate and appear squeaky clean at the same time.

Right now, if the polling remains the same until the election, I have no idea what will happen. Apparently, somehow Labour could win the most seats if it comes in a close 3rd in votes and Liberal Democrats might still remain in a distant 3rd in number of seats. It’s everything or bust for the Liberal Democrats. According to a swing calculator I found, they would need around 41% of the vote to win a majority in Parliament. I assumed the Conservatives would come in 2nd with 27%, Labour in 3rd with 22% and votes for other at 10%.

I think there is a significant chance the Nick Clegg and the Liberal Democrats can keep this up and break into the 40%+ range that the Conservatives were reaching less then a week ago in the polls. There are two more debates to go and Nick Clegg was the clear winner of the 1st one. Can he keepup the “Big Mo?” Soon we shall see.

On Intrade, I’ve dumped all my stock on the Conservatives and I’m going long on the Liberal Democrats. Both to win the election and win a majority. I’ve also gone a little long on Labour winning the election by winning the most seats and being invited by the Queen to form a minority government. The outcome I think is most likely if there is a hung parliament. But honestly I’m still trying to figure out how this entire election will play out. Somehow the Brits have managed to make an electoral system more complicated then the electoral college.

Box Office Predictions – Kick Ass and Death at a Funeral

No Bets this weekend. 

Movie	Opening Weekend Prediction
Kick Ass	$29.02 Million
Death at a Funeral	$23.54 Million

The U.K Election Debates

Today, we will have the first televised debate in the history of the U.K parliamentary election. Prime Minister Gordon Brown will be facing against Conservative candidate David Cameron and the Liberal Democrat candidate Nick Clegg.

There will be two more debates before the election and I highly doubt any of them becomes a significant game changer. Brown and Cameron are pretty good debaters thanks to Prime Minister's questions. As long as one of them doesn't screw up royally, the election will probably continue to proceed with a Tory lead in the polls. The Tories have been polling around 6%-9% better than Labour but simply beating them will not guarantee a majority in parliament. The Tories will have to do better than expected in the marginal seats.

Despite some of the news that Labour has been polling better recently. It was probably just a temporary bounce thanks to the launch of their manifesto, polling has returned to previous levels thanks to the bounce from the launching of the Conservative manifesto.

Considering how long the Tories have been in the lead in the polls and the current economic condition of Britain, I'm betting the Conservatives will hold on to their lead and eventually win a majority. There is still plenty of time left for the political environment to completely change. It might even happen tonight. But by the way the election seems to be proceeding, David Cameron will be the new Prime Minister of the U.K.

Intrade currently gives the chances for a Tory majority at 58%. Volume is still a little low but as the election gets closer, I think we could see some significant volume.

Box Office Analysis – Date Night

I’m taking a break from betting on the movies. This is starting to become really frustrating. Every way I seem to bet, it seems to go the other way. I’ll continue to post predictions and monitor my progress but unless I think I am getting a lock, I am probably not going to bet anytime soon. Luckily, I’ll have the U.K election to monitor and distract myself for a while.

Movie	Prediction	Actual	Absolute (%) Difference
Date Night	$32.31 Million	$25,207,599	28.18%

Box Office Predictions & Bets – Date Night

With no other Opening Weekend competition, Date Night with Steve Carrel and Tina Fey seem poised to break $30 Million for this weekend. On Intertops, I bet on the $29-$35 Million option for +150 American Odds. Let’s hope this movie comes in line with expectations. 

Movie	Prediction
Date Night	$32.31 Million

Maintaining a Weak Currency to Increase Exports is Dumb

From time to time you will hear that one of the benefits of a weaker currency is that it will increase exports. This sounds really good because in every introductory economics class, students are taught that higher net exports increase GDP. We naturally think of GDP as the total measure of wealth in the country.

This is the wrong way to look at it. Now our dollar, the measure of our labor, buys less of a foreign good. That doesn't sound good at all. It now takes more of my money to buy the foreign things that I want. Conversely, foreign consumers can now buy more of our products for less of their money. We are working more to make less!

This may be another reason why GDP may not be as accurate of a reflection of the economy as it could be. One way to adjust for this might be to adjust Net Exports by the change in the dollar compared to a basket of international currencies.

Box Office Analysis – Clash of the Titans, Married Too?, and The Last Song

Well, it’s probably a good thing a I didn’t bet on Clash of the Titans. It came below my expectations despite having 3D ticket prices to rely on. This is probably bad news for other movies that are thinking of converting to 3D instead of being filmed by 3D specific cameras. Tyler Perry continues to pump out movies and make money. Good for him. As for Tracking, MTC has Date Night coming in around $30 Million.  No RS tracking this week. 

Movie	Prediction	Actual	Absolute (%) Difference
The Clash of the Titans	$72.67 Million	$61,235,105	18.67%
Why Did I Get Married Too?	$22.63 Million	$29,289,537	22.74%
The Last Song	$16.78 Million	$16,007,426	4.83%
--	--	Opening Weekend Average	15.41%

Early Intrade Preview - 2012 Republican Presidential Nomination

One of the cool things about Intrade is that they already have contracts being sold and traded for the 2012 Presidential Election. There have already been around 20,000 contracts sold for Sarah Palin alone! Practically 10x more than Romney and any other candidate. Here is how Intrade currently ranks the top 5 Presidential contenders for the 2012 Republican Nomination.

1.) Mitt Romney - Traded Last at 24.9%
The former Governor of Massachusetts, Romney got 2nd in the Iowa Caucuses and New Hampshire. The two most important states in the Primary calender. With McCain likely out of the way, Romney has a clear chance to win New Hampshire and the nomination. However the passing of Obamacare, which so closely resembles the health-care plan that Mitt Romney signed in Massachusetts is going to give him some problems with the Republican base. Personally, I don't think Mitt Romney will win the nomination. He's perceived as a flip flopper and too liberal.

2.) Sarah Palin - Traded Last at 23.4%
The former Governor of Alaska, Sarah Palin was the VP nominee for John McCain. She is extremely popular among some die hard conservatives and Tea Party activists. Among the list of Republican Presidential contenders, she is easily one of the most polarizing and will face many of the same challenges that Hillary Clinton faced when she ran for the nomination. Sarah Palin's path to the nomination will definately not depend on New Hampshire, she would need a win in either Iowa or South Carolina to have a chance. Given her past history on the campaign trail, I don't give her much of a chance. When she speaks, people are reminded of Bush, she has bad advisors, and does not appear to be the smartest of candidates.

3.) John Thune - Traded Last at 20%
John who? If you're wondering who John Thune is or how he got to be the 3rd highest traded candidate in the Republican nomination market, you aren't the only one. He is the Junior Senator from South Dakota who's claim to fame was defeating Tom Daschle (Former Democratic Minority Leader) in 2002. With a weak Presidential field, 2012 might be John Thune's best opportunity as a Presidential contender. He looks Presidential and if he goes for the religious right, he might be able to take away supporters from both Huckabee and Palin to win the Iowa Caucus.

4.) Tim Pawlenty - Traded Last at 10%
The current Governor of Minnesota, Tim Pawlenty was likely on the short list for McCain's VP. Minnesota being a battleground state, Pawlenty can make the claim that he can win those states that were lost to Barack Obama while still being a conservative.

5.) Mike Huckabee - Traded Last at 7.9%
Former Gov. of Arkansas, and winner of the 2008 Iowa Caucus, Mike Huckabee has the potential to completely change the election with his wit and charm. He also had the endorsement of none other than Chuck Norris.

Box Office Predictions – Titans, Tyler Perry’s Married, and Last Song

No bets this weekend, no real market for it this week.

Movie	Opening Weekend Prediction
The Clash of the Titans	$72.67 Million
Tyler Perry’s Why Did I get Married Too?	$22.63 Million
The Last Song	$16.78 Million