This little gem was brought to my attention by Kryton over at ChristopherLydon.org. I don’t know whether to thank him or wish he had minded his own business.Remember John Poindexter’s flyer at the Pentagon a couple of months ago? The one where he was going to create a Terrorism Futures Market so rich investors could bet on when and where the next bombing or kidnapping was going to be? Remember how shocked and outraged we all were? Remember how the reaction was so negative, appalled as we all were, that the Pentagon was forced to kill the project? Bet you thought, “Well, that’s the end of that bad idea.” I did.
Well, we were wrong:
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.
Yup. To quote Kryton, “It’s ba-a-ack!” Only this time it’s going to be run by only one of the original private partners:
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.
No? Then how are your investors going to profit, Polky? Hmmmm? I mean, isn’t “what’s the likelihood that the King of Jordan will be overthrown at some point during the second quarter of 2004?” a fairly specific question? You so naive that you think disallowing use of an actual date will deter bettors from trying to fix the game? All that does is widen the window of opportunity:
“Hurry, Habib–we only have until the end of the second quarter to foment rebellion!”
“Calm yourself, Zayed. I am lining up the last of the disaffected Colonels now. We’ve plenty of time–the end of the quarter is still six weeks away.”
“You move too slowly, Habib. It’s a good thing the market is so open-ended. If we were tied to a specific date, you’d probably sleep through it and our $100K investment would go down the camel’s chute.”
And btw, what does “limit the amount of money traders could invest” mean? I can readily believe that a limit of $10 wouldn’t yield enough reward to justify assassinating a public figure or blowing up a hotel. But then, it wouldn’t be enough to draw the kind of people they need to make the market fly. We have to be talking a fairly high 6-figure maximum at least. Maybe Mr. Polk from his Central Ave penthouse wouldn’t kidnap an American Consul’s kid for a mere $50,000, but I’ve got a flash for him: there are plenty of others who would. Form a syndicate and pretty soon you’re talking about real money.
It was a bad idea then, it’s a bad idea now.
And while we’re at it, could we shut down those obscene Iowa “Electronics”(?) Markets?