Futures Market for War and Terror is Back!

This post was written by marc on November 18, 2003
Posted Under: Bush,Politics

Terror futures market back in business
Web site says trading will open in March 2004, free of U.S. government influence.

November 17, 2003: 4:26 PM EST
By Mark Gongloff, CNN/Money Staff Writer

NEW YORK (CNN/Money) – A U.S. government plan to create a market allowing traders to bet on the likelihood of terror attacks and other events in the Middle East has been revived by the private firm that helped develop it.

The market, called the Policy Analysis Market (PAM), will allow traders to buy and sell contracts on political and economic events in the Middle East, including assassinations, the overthrow of regimes and terrorist attacks. The market is scheduled to start trading next spring.

It originally was developed and funded with the assistance of the Defense Department, where officials cited the uncanny ability of other futures markets to predict election results, weather patterns and other complex events.

Link to CNN Article

This should be interesting. Let’s see = if I bet that the US Economy is going to collapse, can I get paid in some other currency than dollars?

Or – maybe we should privatize Social Security and bet the money on the terror futures market?

This kind of policy even makes Republicans miss Clinton!

Heated public criticism forced the Pentagon to end its association with the project, but its Web site, which was idle for several months, now has an announcement saying it will be open for business in March 2004.

The Pentagon’s partners in the venture would have been San Diego-based market technology firm Net Exchange and the Economist Intelligence Unit, publisher of the Economist magazine. The Economist is no longer involved, and Net Exchange is pursuing the venture alone, according to its president, Charles Polk.

In response to the highly charged criticisms that ended the Pentagon’s association with the project, Polk noted the market is designed mainly as a research tool, not unlike the Iowa Electronics Markets, which have done a pretty good job of predicting the outcomes of presidential elections.

“It is potentially an interesting alternative to Gallup polls or to specialists reporting from the region,” Polk said. “It’s a way of going directly to individuals in the region or outside who have knowledge or interest in the political and economic events in the area.”

Polk said Net Exchange would initially limit the amount of money traders could invest in the market, so that people won’t be profiting from violence or upheaval in the region.

What’s more, the futures contracts would be based on general questions, such as the likelihood that the King of Jordan will be overthrown at some point during the second quarter of 2004, for example, rather than on specific acts or events, which could lend themselves to manipulation by terrorists.

“There are no financial incentives for nefarious activities,” Polk said.

These were the kinds of concerns that drove much of the criticism of the project this summer. Democrats expressed moral outrage at the prospect of a “betting parlor on atrocities and terrorism,” in the words of Sen. Ron Wyden, D-Oregon, while Republicans — including Deputy Defense Secretary Paul Wolfowitz — acknowledged the project subjected the Bush administration to charges of callousness.

But after the project was shelved, some observers expressed disappointment, saying the market could be useful and citing the accuracy of the Iowa futures markets, TradeSports’ Saddam Hussein futures market and others. Net Exchange said “many individuals” encouraged it to start the project up again.

Former Admiral John Poindexter, who was forced to leave the Pentagon in part because of his association with the project, will not be involved in the market, Polk said.

Reader Comments

Marc,

Concerning the collapse of the U.S. economy,
I would be willing to risk (1) Federal Reserve Note in a One Dollar denomination. That is of course if you are willing to accept an instrument of debt from a private corporation.

#1 
Written By Gotcha on December 4th, 2003 @ 4:24 am

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