Although the race has been tight in recent weeks, and McCain even enjoyed a slender lead in the days after the Republican convention in early September, the storm force economic winds that have since passed over America have driven most of the unattached voters to seek protection beneath Obama's skirts. A Gallup poll released today has Obama in a double digit lead (52 per cent to 41) for the first time in this election, as even McCain sympathisers are finding it hard to commit to voting for a party that has presided over such a terrifying squandering of their retirement funds, reduction in the value of their properties and destabilization of their employment prospects.

In the same Guardian round up of opinion, Stephen Hess, who worked for a number of presidents between the fifties and seventies, said "If McCain were to win this election I think it would truly be the biggest upset in American political history... I don't think you can have an economic situation this bad, and not expect to throw out the in party."

Matt Bennett, from the Democratic think tank Third Way, was also not surprisingly pessimistic about McCain's prospects. "I would say that he's in intensive care, but not quite in hospice at the moment," he said. "He's just not a skilled enough campaigner and he's in such a tight spot that there's no magic bullet he could fire."

However, the Democrats are unsurpassed in their ability to rain on their own parade come election time. No political organisation with the power and influence of the American Democratic party has allowed themselves to be deprived of office, whether by their own incompetence (such as in 1988) or because the Republicans bullied them out of it (such as in 2000) with quite such regularity.

Could this compulsion to shoot themselves square in the knackers come election time still have time to affect the outcome? As for incompetence, the Democrats are handling themselves quite well. They nearly tripped up over the Reverend Wright issue (the pastor who was close to Obama but turned out to have some unconventional opinions about America that didn't sound too good to voters) and were temporarily stunned by the Sarah Palin bounce, but they are showing all the signs of keeping it together.

As for Republican bullying, there's no doubt that the gloves will now come off. Obama is going to have to put on his reinforced insult shield, because the McCain campaign now has few options other than to call in the fleet of election class muckspreaders to fling some pungent dirt around. Their main problem is sourcing something to fling - the latest accusation of Obama's "palling around" with a "domestic terrorist" (a sixties Weather Underground radical turned college professor) is not currently sticking.

Another vain hope for McCain is that the economy suddenly perks up and this crisis evaporates - close on impossible. As is the optimistic belief that the newly enfranchised ranks of 18-2- year -old Obama voters won't make it out of bed on the days.

But while life appears to be ebbing from the Republican campaign, there are still another three weeks for them to rise from their death bed and spook the life out of the Democrats. To do otherwise just wouldn't be American.

In a fascinating recent study, entitled 'Forecasting Elections from Voters' Perceptions of Candidates' Positions on Issues and Policies', Andreas Graefe and J. Scott Armstrong address this question. After eight years of George W. Bush their (perhaps surprising) conclusion is that American voters have a history of choosing the candidate they expected to do the best job in dealing with the issues facing the country.

The approach they adopt, called PollyIssues, is based on voters' perceptions of how well the candidates would deal with issues facing the country if they were to be elected. Graefe and Armstrong tested their approach for the nine US Presidential Elections from 1972 to 2004, analysing data from 315 historical polls. In seven out of nine cases, they correctly predicted the winner of the popular vote.

Moreover, for the last three elections, from 1996 to 2004, they provide evidence that PollyIssues was more accurate than four other well-established election forecasting models. For the 2008 election they are also using an approach known as PollyPolicies. This is based on voters' preference for policies and their perceptions of which policies the candidates are likely to pursue.

How valuable are these approaches likely to be in improving our estimate of the likely result of this year's US Presidential election? Might we not be as well to look at the polls? If we do, we see that Obama is currently over six points up in the RealClearPolitics polling average, and more if polls arbitrarily excluded by RCP are included (this is another story, and election-watchers are advised to turn to Pollster.com for an impartial and complete polling guide).

To some extent, yes we should look at polls - but it mustn't be forgotten that these are a snapshot in time rather than a crystal ball. Betting markets, on the other hand, do look into the future and the question in this case is whether the findings of the new study are properly assimilated into these markets.

Whatever our conclusions, it is clear that the Graefe and Armstrong study does offer us access to extra pieces of the jigsaw.

So, who will win the U.S. presidential election if voters decide based on which candidate they expect to do better at handling the issues? For 2008, their model predicts the Democratic candidate, Barack Obama, as the election winner, with 50.7% of the two-party vote. And what about PollyPolicies? It also predicts Obama to win the popular vote.

In four weeks' time, we shall see whether the models are right. Much more importantly, we shall also see whether Americans really do vote for the best President.

And they'd all be right - the vice president doesn't have to do anything, if the president so wishes, other than be available to step in should death or disgrace intervene. Of course, the VP doesn't have to sit around drumming his or her fingers on the desk for eight years - although plenty of presidents have come close to such inactivity - and the incumbent, the spectral presence Dick Cheney, has probably had more impact on the activities of the Bush administration than Bush himself. Nonetheless, the "veep" is essentially an understudy, rarely used and swiftly forgotten.

This time round, though, what with John McCain being so advanced in years, voters have had to pay closer attention to his choice of running mate, as the likelihood of that person having to take the wheel at some point, should he win, is considerably higher than usual.

McCain has also made a memorable choice - indeed the way the polls are turning against him at the moment, the only thing his campaign may be remembered for is the decision to run with the Governor of Alaska, the moose-hunting hockey "mom", Sarah Palin.

At first, it looked like a nutty decision, then it swiftly seemed an inspired one, as voters suddenly liked the idea of finding a normal-ish person on the ticket. Once the press really started to investigate this mysterious stranger, however, her firepower diminished as her lack of substance was gradually revealed. She even managed to make the beleaguered news anchor Katie Couric, losing an ugly TV ratings battle of her own, look like an incisive journalist when she gently pushed Palin to name the newspapers and magazines that informed her political thinking and Ms Palin failed to offer up a single title.

Gerard Baker, writing in The Times, said: "Thanks to those disastrous TV outings, expectations for her performance before the debate were so low that she could have exceeded them simply by coming on stage and smiling beatifically for an hour and a half."
Instead, she held her own against Obama's number two, Joe Biden.

Critics praised her folksy approach; "What viewers got was a full dose of the aw-shucks, regular-folks Palin personality, with no effort to turn it into anything else. Within minutes, she had said "heck" and "darn," and referred to "Joe Six Pack," said Gerald Seib in the Wall Street Journal.

Biden was also considered impressive, though, especially in his specialist field of foreign affairs, but who won? Who knows.

"It was a fascinating byplay," says Seib, "but not necessarily one that changed many minds."

This failure of the debate to shift voters from their established positions is reflected in the comments that follow some of the newspaper reports.

"Governor Palin clearly won the debate, and she did it with 'style and class.' She has the beauty of a Queen Rania, the poise of Ronald Reagan, and the conviction of Mother Theresa. She will be THE reason McCain-Palin ticket wins. What an answer to prayer!" gushed one Jeff Burnsed of Jacksonville, Florida in The Times.

Yet Kay of Lindenhurst, responding to the same piece, commented "I felt like I was listening to a commercial when she (Palin) spoke. Biden won the debate by miles."

The only real conclusion to draw from the debate, then, is that it failed to produce a good reason for anyone to switch camps or think differently about the presidential candidates, which is great news for Obama, not so for McCain. For the latter, the gap in the polls is starting to look unbridgeable by fair means. It could be time to visit the dirty tricks closet.

(The Realclearpolitics.com average of polls has Obama 5.7% ahead. The Betfair Next President market has Obama at [1.35], McCain at [3.9].)

In political betting, the world can be turned on its head in a much shorter space of time, as we've seen so many times in the last year. Most recently, Labour were trading around [1.1] a couple of hours before losing the Glasgow East by-election, and their internal deputy-leadership contest saw Alan Johnson trading at similarly short-odds just a few minutes before Harriet Harman was declared the winner.

The most dramatic recent turnaround of all came in the US Presidential contest, when Hilary Clinton's win at the Democrat primary in New Hampshire stunned Barack Obama's 1.01 backers.

In fact the whole Presidential race has been littered with upsets so far. Clinton herself traded as odds-on favourite, while both Republican candidate John McCain and VP pick Sarah Palin were written off as no-hopers before winning their respective markets.

Why do these upsets occur so regularly in politics? Principally, the cause tends to be the market over-estimating the accuracy of 'breaking news' and media analysis. Its not that the analysis is always wrong, but pundits in a TV studio can only know so much about the reality on the ground. Their perspective is inevitably clouded by rumours and the stream of often unreliable exit polls.

Indeed, it was these dubious exit polls that turned the in-running market on its head in the last Presidential election. Though everyone expected a tight contest beforehand, once several exit polls gave crucial states to John Kerry, his price plunged into [1.25]. An hour later, it was apparent he'd lost.

So as we enter the final month of an enthralling contest, are there any upsets left? Again, the consensus has been that the result will be very close, but in the last few days Obama's poll-lead and market dominance has surged, forcing his odds into [1.5].

Perhaps Obama's improved position owes something to a strong performance in last week's opening debate, but more likely is that the polls are responding as the electoral agenda shifts on to his favoured territory. If John McCain would like to see the debate centred on foreign policy experience, Obama would much prefer to discuss the economy.

The ongoing crisis ensures that the economy will remain centre-stage from here on in, which should favour the Democrats after eight years of a Republican presidency widely perceived as to blame. Democrats dominate the Senate, House of Representatives and national opinion polls. If George W Bush or any of his key allies were his opponent, Obama would be a cast-iron certainty.

But here's the caveat - John McCain is not Bush, not by a long chalk. In fact he's not really like any recent Republican candidate. McCain's personal history as a former POW in Vietnam, and his conduct throughout a long political career has earned widespread respect in a way other politicians can only dream of. Its only a few years since McCain topped polls for the nation's most popular politician.

The self-styled 'Straight Talk Express' positions himself as an outsider, a maverick determined to shake up Washington. Always prepared to oppose his own party when principle demands and work across the political divide, McCain further enhanced his appeal to independent voters with his outspoken criticisms of Bush. Support from the politically non-aligned was crucial in helping him upset the odds to win his party's candidacy, and it could yet prove so again.

Another key will be the trends amongst women voters, which no doubt informed McCain's shock decision to select unknown Alaska Governor Sarah Palin as his running mate. Initially, her entry into the race has seemed to help McCain's cause. Not only does her presence on the ticket ensure the Republicans retain the strong evangelical support that carried Bush to the Presidency, but she could also win over female voters who identify with her 'hockey-mom' tag - including some of Hilary's disillusioned supporters.

Alternatively, Palin's very short time in the public spotlight has polarised public opinion. Her views on social issues such as gun control or abortion could just as easily undo some of McCain's appeal to independents, as could a blatant lack of foreign policy knowledge. Nevertheless, she remains the 'joker in the pack', and probably McCain's best chance of pulling off yet another famous political upset.

In short then, while Obama remains a strong favourite, you write off McCain at your peril. If the last two elections are a guide, then swing states such as Ohio and Florida will prove decisive. Both of those are currently too close to call. Betfair have in-running markets on all these individual states, and history would suggest that we're bound to see at least a couple of big turnarounds on the night. Above all, be very, very wary of early exit polls!

Well, there's more than one way of looking at this. You can look at the 'instant polls' conducted by some of the networks in the immediate aftermath of the debate, or you can look at the 'focus group' findings of Republican pollster Frank Luntz, or you can look at polling conducted in the days following the debate.

In the instant polling, Obama won by 51% to 38% (CNN/Opinion Dynamics). In the CBS poll of undecided voters, 40% thought Barack Obama was the winner, 22% chose John McCain and 38% scored it a draw. 46% came away with a better opinion of Obama, compared to 8% with a worse opinion (46% no change).

In comparison, 32% came away with a better opinion of McCain, 21% a worse opinion, and 47% no change. In other words, Obama's ratio of better to worse in the CBS poll was almost six to one compared to 1.5 to one for McCain.

I expected a different opinion to emerge from Frank Luntz's focus group, as they usually seem (at least in my opinion) to emerge with the pre-existing views of the Republican analyst and Fox News regular contributor himself. Not so for once, as the group called the debate a win for the Democrat.

Move forward to the latest post-debate polling, by USA Today/Gallup, and all this is confirmed. When asked which candidate offered the best proposals to solve the country's problems it was Obama by 52% to 35%. As to who did better overall in the debate, it was Obama by 46% to 34%. In light of these statistics, it is interesting to examine how the Betfair market on 'Next US President' reacted in-running to the cut and thrust of the debate.

As moderator Jim Lehrer opened proceedings, it was possible to back Obama at [1.55], the equivalent of just short of a 65% chance. Twenty minutes into the debate and the Democrat had shortened to [1.52] and stayed there or thereabouts until the end of the section of the debate dedicated to the financial crisis. The economy is, according to conventional wisdom, Obama's strong suit, and the market reflected that his performance was if anything better than expected. As soon as the debate turned to foreign affairs proper, however, the money began to switch to McCain, and by the end of the debate it was possible to back Obama at [1.56], a touch longer than available at the start of the debate. Fast forward to 10 am (UK time), though, and Obama was trading at [1.54]. Given his pre-debate price of [1.55], nothing much had changed at all.

So the polls tell us it was Obama who won it; the markets, on the other hand, seem to tell us that the debate may as well have not taken place for all the effect it had on the election. Now contrast the failure to pass the financial bailout package. Obama shortens from [1.5] to [1.42]. That's the effect of real news!

True to form it worked for Barack Obama and it worked for John McCain. It worked for the Liberal Democrats and it appears to have worked (according to a recent YouGov poll) for Labour. To be precise, the online pollster registered a seven point bounce in Labour's standing after Gordon Brown's keynote speech compared to polling conducted before it.

This is certainly good news for those in favour of keeping the Prime Minister in his job and pre-empting a leadership contest. The problem with all this is that polls ebb and flow with what often looks like crazy abandon in response to the latest burst of positive or negative publicity, and in any case only register what people say they would do if there were to be a general election tomorrow.

In truth, there will not be a general election tomorrow and the opinion polls are not forecasting tools. Instead they are mere gauges of public sentiment at a moment in time. Worse still, we cannot be sure how many of those expressing their support for the opposition parties are doing so as a type of cheap and easy protest vote.

This certainly occurs in by-elections, which is why we so often witness huge swings against the governing party during the mid-term. Voters know they can register a protest at by-elections without actually changing the government.

For all these reasons, Labour party strategists could do worse than look to the betting markets to measure the impact of the announcements in the Prime Minister's speech for the likely fortunes of the Labour Party at the next general election.

In the immediate wake of the speech, with the YouGov poll bolstering party spirits and the chance of a challenge to Gordon Brown seeming to diminish by the hour, the Betfair market registered barely a murmur of interest. As before the speech, the chances of a Conservative overall majority stood at 63%, with a 77% chance that the Tories would win the most seats in the House of Commons. By contrast, Labour's hopes of holding on to their majority were represented in the market at just 14%. Nothing much has changed since.

It's a point taken up in an excellent article in this week's 'Economist', a regular read at No. 10 Downing Street . In a piece entitled 'Dead-cat bounce', much the same point is made. For that analysis, featuring the Betfair prices, I was interviewed and accurately quoted: "If you're dissatisfied with the government, you may tell a pollster you'll vote for the opposition. But gamblers bet on what they think will happen, not to register a protest. After all, it's their own money they stand to lose."

The Prime Minister is perhaps hoping that none of malcontents in the Labour Party read the Economist. With a readership of 4 million, this is perhaps too much to hope for. The better hope is that the possible players in any leadership plot have no faith in the betting markets. We shall see.

Those clever folk at B.B have come up with the ideal widget that you can embed onto your site for a live updating commentary on who's ahead in the race. If Obama fluffs his lines in Indiana or McCain falls out of a New York club at 3am, watch their chances of victory change!

Roll your mouse over the graph lines and get a running on commentary on who's hot and who's not.

Click here to embed the widget - scroll down to see a number of different sizes. If you have an affiliate code, you can add it in and make it pay for you!

You can embed this graph into your own site or blog - go to the Betfair Politics Zone to get the code.

Click here to bet on the Next President market

You can embed this graph into your own site or blog - go to the Betfair Politics Zone to get the code.

Click here to bet on the Next Vice President market

You can embed this graph into your own site or blog - go to the Betfair Politics Zone to get the code.

Click here to bet on which party will win the most seats at the next UK general election

You can embed this graph into your own site or blog - go to the Betfair Politics Zone to get the code.

Click here to bet on which party will win the most seats at the next UK general election

The idea of either nominee getting their hands dirty in the economic crisis is risky in the extreme. The Herald Tribune states George Bush's call to get them involved "puts them directly on the line over an issue whose politics are mutating almost by the hour, forcing them to balance a sense that the country is angry about the prospect of being stuck with the bill for Wall Street's excesses against a chance that failure to act quickly could have dire economic consequences." As we reported in this column last week, a souring economy benefits Obama and the Democrats, he has more to gain by staying above the fray.

The political brinkmanship on offer on the eve of the first presidential debate highlights the importance of the next stage of the presidential campaign: going head to head on TV in millions of American homes. History shows that the presidential debates can prove decisive come Election Day and McCain's left-field 'suspension' tactic is being viewed in the Democrat camp as an attempt to avoid the battle while his momentum has seriously faltered in the last week. Betfair pundit punters have backed the Republican down to [2.86] and have Obama shorter than last week at [1.56].

In the 1984 debates, a 73-year old Ronald Reagan was asked whether his age would affect his ability to do the job. Reagan famously quipped "I will not make age an issue of this campaign. I am not going to exploit for political purposes my opponent's youth and inexperience." Reagan's rival for the White House, Walter Mondale believes he lost the election at that moment: "I knew right then he'd gotten me, and that was the end of my campaign."

Democrat nominee Al Gore suffered a similar fate in 2000, when his childish antics cost him a ten-point swing in the polls and led to a mightily close election defeat. During the debate, Gore petulantly sighed and rolled his eyes as George Bush spoke and then aggressively approached his mild-mannered opponent in mid-sentence. Such is the scrutiny of the occasion that style is typically every bit as important as content.

McCain has every right to be concerned. Obama is the more proficient public speaker of the two candidates and the Illinois Senator should impress with his charismatic manner. McCain meanwhile will be largely dependant upon hard hitting policy and attempting to expose Obama's alleged lack of substance.

Despite McCain's stalling tactics, the first of the three debates should favour the Republican as it will focus on foreign policy, a topic in which he professes to be an expert. Obama does not consider foreign affairs one of his stronger suits and the Democrats are attempting to pile expectation on the 72-year old with unorthodox sport analogies: "This debate offers him major home-court advantage and anything short of a game-changing event will be a key missed opportunity for him."

Regardless of the topic of debate, and the meticulous planning of every possible answer, the rehearsed material is not where the debates will be won and lost; the candid discussion is key. According to realclearpolitics.com "It is that the unanticipated insight - the spontaneous, revelatory moment is what becomes a potent factor in the general election and a memorable touchstone in American political history."

The real value (comedy-value not necessarily betting value) will be with the Vice Presidential debate, a tete-a-tete that has received unprecedented levels of attention due to the media frenzy surrounding Sarah Palin. The Republicans are keen to shield the hugely inexperienced Palin and have thus demanded that her debate with Joe Biden follows a strict format for fear that the Alaska governor would otherwise spend much of the time defending her credentials. Biden himself is described in the New York Times as "a loquacious and gaffe-prone speaker" and could do more damage than good to the Democrat cause. Should be fun.

When Hurricane Ike had finished turning the tables over in the Houston/Galveston area, the media's attention turned to the gripping spectacle of havoc spreading through America's most powerful financial institutions.

Still, the candidates have to press on, even if the audience is a little distracted. To try and claw back some of the spotlight, they chose to share their wisdom on the subject of the ailing economy. (Neither, to their credit, opted to pronounce on how they would be dealing with hurricanes should they win the White House). For John McCain, that decision proved to be a disaster. As Wall Street went over like cardboard in a week of such far reaching economic catastrophe it is amazing no one has yet coined a name for it, McCain's blithe analysis of the carnage was that "the fundamentals of our economy are strong." When the evidence became overwhelming that no one had the faintest idea what condition the fundamentals were in, but that they were definitely looking a little green around the gills, McCain's damage limitation exercise felt as feeble and pathetic as some of America's financial institutions' death throes.

"Hours later he backpedaled," said the McCain-hating New York Times gleefully, "explaining that he had meant that American workers, whom he described as the backbone of the economy, were productive and resilient. By Tuesday he was calling the economic situation "a total crisis" and denouncing "greed" on Wall Street and in Washington." Nice U-turn, Senator.

While McCain was suffering his own personal credibility crisis, the Obama camp went into overdrive to let America know the stupid old man was grotesquely out of touch and to allow him to govern would be an act of near criminal irresponsibility. They used a slightly different combination of words to make their point, but they didn't hold back.

Paradoxically, Obama would love to see the crisis continue. For him, bad news is good news. Or as right wing pundit Richard Baehr wrote, "In terms of political momentum, when the topic being debated is national security or social issues and values, McCain benefits. When the topic is a souring economy or financial crisis, Obama wins. So this week, it is Obama's week to ride with the tide." The Realclearpolitics.com average of polls has the candidates neck and neck, after Obama slipped behind last week. Betfair has Obama to win at [1.67], McCain at [2.48].

The events of the last two weeks - first the Sarah Palin, pig-in-lipstick imbroglio, then the Wall Street meltdown - also serve to illustrate what a tenuous grasp the candidates have on controlling the message as the election looms.

In spite of their spending hundreds of millions of dollars on television advertising and campaign field teams, this election may ultimately be decided by the team which responds with most agility to the boulders that roll their way.

According the Herald Tribune, neither candidate now has his hands firmly on the reins of the media. "It has reached a point where senior campaign aides say they are no longer sure what works, as they stumble through what has become a daily campaign fog, struggling to figure out what voters are paying attention to and, not incidentally, what they are even believing."The paper suggests the candidates would be better served preparing for the forthcoming debates than firing more cash into the mist. All those good cash dollars spent, and people barely believe a word the candidates say. Such ingratitude.

Those who guessed closest would receive prizes. About 800 people entered. Ever the scientist, he decided to examine the ledger of entries to see how clever these ordinary folk actually were in estimating the correct weight. In letters to 'Nature' magazine, published in March of 1907, he explained just how ordinary those entering the competition were. "Many non-experts competed", he wrote, "like those clerks and others who have no knowledge of horses, but who bet on races, guided by newspapers, friends, and their own fancies ... The average was probably as well fitted for making a just estimate of the dressed weight of the ox as an average voter is of judging the merits of most political issues".

The results surprised him. For what he found was that the crowd had guessed (taking the mean, i.e. adding up the guesses and dividing by the number of entrants) that the ox would weigh 1,197 pounds. In fact, it weighed 1,198 pounds! The median estimate (listing the guesses from the highest to the lowest and taking the mid-point) was also close (1,207 pounds, and therefore still within 1% of the correct weight) but not as close. Some have argued that Galton himself favoured the use of the median rather than the mean, and so was double-surprised when the mean beat the median. Others have argued that the point is incidental and what this tale demonstrates about the wisdom of the crowd is more important than such a fine statistical detail.

I think that both these points of view contain some merit. The power of the market to aggregate information is indeed a critically important idea. But it is also important to be able to distinguish in different contexts which measure of the 'average' (the mean, the median, or perhaps some other measure) is more suited to the purpose at hand.

Take the stream of opinion polls which contribute to the collective knowledge that drives the Betfair market about the identity of the next President of the United States. If five are released, say, on a given day, what is the most appropriate way of gauging the information contained in them? Should we simply add up the polling numbers for each candidate and divide by the number of polls, or should we list them from highest polling score to lowest and take the mid-point. The convention adopted by sites such as www.realclearpolitics.com is to take the mean. But is there a better measure than the mean of discerning the collective wisdom contained in the polls, and if so, what is it? The jury is still deliberating.