The Longest Election Ever

Predicting the future is usually a fool's game:

"I think there is a world market for maybe five computers." (IBM, 1943)
"Who the hell wants to hear actors talk?" (Warner Bros, 1927)
"They couldn't hit an elephant at this dist..." (General John Sedgwick, 1864)

...yet the outcome of the November 2008 U.S. election is already being predicted. Some have such certainty that they are betting huge sums of money on the result. Intrade is a site which mediates the political futures market, where people wager against a future event. This graph shows how much a $100 contract costs; that is, if I buy a 10¢ contract today on Newt Gingrich, and he wins the presidency in November 2008, I get $100. (It seems like a long shot.) This kind of trading was a very accurate predictor of the 2004 election, both nationally and state-by-state.
There have also been dozens of polls taken across America to determine who is popular, with particular attention on a number of key states: Iowa, New Hampshire, Florida and California topping the list. The averages of these polls, aggregated here (each dot is a poll result) show Hilary Clinton as the clear favourite.
The reason that Iowa and New Hampshire are important is because they are among the first to vote. The outcomes in one state alone can hugely effect the overall result: Bill Clinton was polling as the sixth-place Democratic candidate before New Hampshire (he came second there behind Tsongas... who?).
The Democratic and Republican parties select a single Presidential candidate each, beginning in January 2008, going state by state in this way. It takes months. By June there is a clear winner, and the nominee selects a running mate who will be Vice-President if they win (e.g. Bush/Cheney 2004).
America is so vast and varied as to appear schizophrenic to other countries. Bush was reviled well before Iraq by millions; Hilary Clinton is likewise despised in the South, the Midwest, and large chunks of solid Democrat states. While her approval rate is high, her disapproval rate is almost as high. This is easy to explain on one level. She is a woman, a liberal, and an intellectual in a male-centric, conservative, and anti-intellectual country. But her policy positions are almost identical to second-place Democrat, Barack Obama, who despite being another outlier (first black Senator, first serious black presidential candidate-- sorry, Jesse Jackson) is hardly reviled. Websites have been established to discuss the mysterious anathema against Clinton. It may simply come down to the fact that, while she'd be a great President, she doesn't seem to have the greatness of bearing, firmness of jaw or easy confidence that Americans like in their leaders. It's more like firmness of bearing and greatness of jaw, with confidence that makes people feel uneasy.
Rudy Giuliani (AKA New York's 9/11 mayor), is leading the Republican fray. His pro-abortion, anti-gun positions make him an unlikely candidate, though given that the second-place guy is Ronald Reagan II and the third-place guy is a Mormon, it's not a strong field. Widespread disillusionment around Bush is casting a long shadow over the Republican camp, and the Democrats are widely tipped to win in 2008 regardless of the candidate. Which will be Hilary.
The first significant event is the Iowa primary elections on January 3, when Americans registered as Democrats vote for their candidate, and Republicans for their's. It is generally clear by February who is going to win the nomination, and pundits begin writing about who the running mates will be.
Whoever wins the November '08 election, it will be unlikely to change the situation in Iraq. One-third of the Senate and Congress are elected at that time, too, so the majority of Republicans or Democrats there are uncertain. Any bills initiated by the White House must pass through those houses before becoming law. Clinton and Obama want troops to return home, gradually. They also want universal health care, a ban on assault weapons, and little green pixies to appear from thin air, all of which are equally likely to occur by 2012. What they may achieve is a reversal of Bush's tax cuts for millionaires and a cooling of the hatred simmering in all the countries where U.S. troops are currently stationed.
Under a Republican White House the status quo will continue.