Has Clinton Left Herself Open to Extortion?

 

"I know everything."

The news this week that hackers released a trove of DNC emails has the media world atwitter, but they're missing the big picture. Their focus has been on the specific content of this particular batch of emails, and that it reveals a primary-rigging party infrastructure, headed by the loathsome Debbie Wasserman Schultz.

Okay, true enough. That's a legit story, particularly on the eve of the Democrat convention. 

Wasserman? Gone, although now comfortably ensconced in the big-money machinery of the Clinton campaign, her payday assured. But Wasserman's a sideshow.

The bigger picture here is who hacked these emails, and why? Democrats, having dismissed any concerns about state-sponsored hacking during Hillary's server scandal, are now pointing their fingers at the Russians. They think that Trump is coordinating the attack with Putin, which is flat-out comedy gold.

But, they may be half right. There's a decent chance the Russians are behind the hack. There is a huge hacker culture in Russia, and their government is known to employ it for their own ends. If that's the case, and they easily hacked the DNC, is there even the slightest chance they didn't hack a lone server in Hillary's basement? Let's face it, there's a decent probability the Russians have all those tens of thousands of emails that Hillary went to such great lengths to conceal.

We all know what's in those emails, too, even if we don't yet have access to the smoking gun. It ain't yoga. The Clintons put the State Department up for sale, exchanging favors for either large money transfers into the Clinton Foundation or bogus speaking fees. Bill and Hillary are two grifters whose ambitions took the con to heights never before seen.

So, if you're Vladmir Putin, what do you do with such a bounty? One option is do undermine Hillary's chances for election, preferring instead to deal with Trump, who would presumably be of more help in staving off the mutual threat of radical Islam. The first email dump might have been a shot across the bow.


But a second, perhaps more compelling, option exists: extortion. In this scenario, Putin holds back from here, hoping Hillary actually gets elected. After that, he makes it known to Hillary through surrogates exactly what he has, and how he can easily feed it all to that dependable lackey, Julian Assange. 

Given Hillary's highly developed instincts for self-preservation, there's no question that such a development could alter the world's geo-political map. Or maybe Russia plays it more subtly, instead opting for small wins, like snapping up the odd strategic mine here and there.

Either way, it's chilling.

I'm not big on conspiracy theories. Emphatically not. But let's review what we know:

1. The DNC was successfully hacked by someone who is using the information for political advantage
2. Many believe, including the DNC itself, that the Russians were behind the attack
3. James Comey stated that it was "likely" that foreign governments tried to hack Hillary's personal server, although the FBI couldn't prove it
4. The Russians (or Chinese) would certainly have hacked Hillary's server if possible
5. Hillary's server had far fewer security safeguards, undoubtedly, than the DNC's

Right now my model says Hillary is likely to win. We may have the first president since JFK to leave themselves open to extortion. 

That's the real story.

It's That Time - Re-Introducing the Election Forecast Model

In 2004, I introduced a model I built to predict presidential elections. More specifically, it predicts the outcome of the electoral college, which is all that matters, after all. So far, the model has worked out pretty damn well: in 2004, it hit the electoral count on the nose, and in 2008 2012 it got the winner right, missing the actual count by only 21 votes both times, or roughly the value of an Arizona swinging from one candidate to the other.

The model is built on "prediction markets," where real-world betting happens on each state's outcome. Betting is continuous, and from it we may infer each state's real time probability. I then multiply this probability times the number of electoral votes available in that state for the probablity-weighted outcome. It is understood that one cannot win part of a delegation, it's all-or-none (excepting Maine and Nebraska). Still, for predictive purposes, you don't want to hand 100% of, say, California's electoral votes to Hillary just because she has a 95% chance of winning those votes. You give her 95%. It's effectively a small hedge against something dramatically unexpected happening.

It's time to roll out the 2016 model. Right now, it has Hillary winning a somewhat tight election, 299 to 239. In 2012, Obama won 332 to 206.

 

State	Electors	Percentage	Repub margin	current betting	weighted expected
		of Electors	2016	market odds	electoral votes
Alabama	9	1.67%	23	100	9.00
Alaska	3	0.56%	15	100	3.00
Arizona	11	1.86%	9	70	7.70
Arkansas	6	1.12%	24	100	6.00
California	55	10.22%	-33	6.5	3.58
Colorado	9	1.67%	-7	21	1.89
Connecticut	7	1.30%	-17	0	0.00
Delaware	3	0.56%	-19	0	0.00
Dist. of Columbia	3	0.56%	-87	0	0.00
Florida	29	5.02%	-1	40	11.60
Georgia	16	2.79%	8	78	12.48
Hawaii	4	0.74%	-43	0	0.00
Idaho	4	0.74%	21	100	4.00
Illinois	20	3.90%	-17	7	1.40
Indiana	11	2.04%	10	85	9.35
Iowa	6	1.30%	-6	43	2.58
Kansas	6	1.12%	20	100	6.00
Kentucky	8	1.49%	23	100	8.00
Louisiana	8	1.67%	17	100	8.00
Maine	4	0.74%	-15	0	0.00
Maryland	10	1.86%	-26	4.5	0.45
Massachusetts	11	2.23%	-24	7	0.77
Michigan	16	3.16%	-9	22.5	3.60
Minnesota	10	1.86%	-8	17	1.70
Mississippi	6	1.12%	11	100	6.00
Missouri	10	2.04%	10	81	8.10
Montana	3	0.56%	13	100	3.00
Nebraska	5	0.93%	21	100	5.00
Nevada	6	0.93%	-6	34	2.04
New Hampshire	4	0.74%	-6	33	1.32
New Jersey	14	2.79%	-17	9	1.26
New Mexico	5	0.93%	-10	0	0.00
New York	29	5.76%	-28	8.5	2.47
North Carolina	15	2.79%	-2	51	7.65
North Dakota	3	0.56%	20	100	3.00
Ohio	18	3.72%	-3	42	7.56
Oklahoma	7	1.30%	34	100	7.00
Oregon	7	1.30%	-8	0	0.00
Pennsylvania	20	3.90%	-6	34	6.80
Rhode Island	4	0.74%	-28	0	0.00
South Carolina	9	1.49%	11	100	9.00
South Dakota	3	0.56%	18	100	3.00
Tennessee	11	2.04%	20	95.5	10.51
Texas	38	6.32%	16	91.5	34.77
Utah	6	0.93%	48	84.5	5.07
Vermont	3	0.56%	-36	0	0.00
Virginia	13	2.42%	-4	22.5	2.93
Washington	12	2.04%	-15	8	0.96
West Virginia	5	0.93%	26	100	5.00
Wisconsin	10	1.86%	-6	21	2.10
Wyoming	3	0.56%	40	100	3.00
Totals	538	100.00%
red = swing state (odds between 30 and 70)
		270 needed to win		Republican	238.6
				Democrat	299.4

There are caveats.

First, since the election is four months out, the data is pretty thin (i.e. the state-by-state markets are very thinly traded right now - some haven't even traded at all, in which case I relied on the closing data from 2016).

Second, when I cited the model's accuracy, what I was really referring to was the last snapshot before each election. During the months-long run-up, there will be plenty of fluctuation, but it will still tend to be the best indicator at any point in time. Obviously, as circumstances change, so does the forecast.

Why does this work better than polls? Because it's real people betting real money, not people answering polls on the phone where their responses could be shaded for any number of reasons - particularly this year!
 
I will start to graph all this and post more frequent updates as the election draws nearer.

Naked Dollar readers with good memories will also remember I have another model that shows directional movement for both campaigns. I'll get to that shortly.