T Nation

Terrorism Futures Market


(AP) - The Pentagon is setting up a stock-market style system in which investors would bet on terror attacks, assassinations and other events in the Middle East. Defense officials hope to gain intelligence and useful predictions while investors who guessed right would win profits. Of course, the Democrats are already ensuring this plan doesnt go through. Nevermind it might yield new insight as to the possibility of attacks and to whom, and thus save lives and make the job of our tropps a bit easier. Why? Because it is offensive to those dying.

If it helps save lives, we need to forget about it being 'offensive'. This isnt an Oprah show or a movie which needs to be censored. This is reality, and when soldiers are losing their lives, we need to focs on increasing ways to protect them, not on making sure it's politically correct.


I think if you really wanted to save lives, you'd pull the troops out. Whether you supported the war or not, I can't think of one good reason why our troops continue to die.


Wow. That's. Really. Sick.


How`s that different from a forum or a stock market?

Nobody can predict the stock market efficiently and consistently (beat the indexes in a sustained way) short and mid-term. You know, long term, based on history, it will always go up in a steplike manner.

Im curious how they will implement it and how it will be that different. And what about manias and crashes. How will be the arbiter? What is thecurrency, thepricing systems`, so to say?


One good reason why our troops are still in Iraq: to rebuild a country paralized with extreme fear the baath party will take over once again and mass-murder all those who aided the US war effort to oust Saddam; to completely eliminate Saddam's supporters; to make sure the job we did there, will not have to be redone at a much higher cost 10 years from now (sound familiar?).

On second thought, I will agree, that a terrorism futures market might not be such a good idea. Simply because those who plan a terrorist act, could also use the system to cash in - and since this would be a good motivator for a greedy insane individual to become very rich by committing an atrocity.

I would need to hear different points of view to form a solid opinion on wether this will be good or bad.


I read this on the BBC news website and was trying to fathom out the best way to approach this,

at most rugby clubs you will have a dead pool where you pay a fiver and then get given some people who are famous and basicaly if that person dies you get all the money.

now witht the pentagon's approach it seems that they don't want to take responsibilitie for future actions that people may take as their own services are failing them, this is a very bad idea as the obvious point that comes to my mind is that the public will be able to sway actions of people by placing money onto a person our outcome, e.g if everyone decided that tony blair was doing a bad job and placed money onto it then perhaps a less stable person would see the oppurtunity to gain noteriety and money by actually carrying out this act.

So in my mind, a bad idea.


Somebody must really think that our brains have been replaced with fluff 'n' nutter sandwiches. If I were overly cynically, I'd talked talk about the ways in which the administration could manipulate this market to make even more money for its friends. But I'll put it this way instead. If this little invention had been in place before 9/11, would you wanted your retirement account to have benefited from holding a position in "Attacks on American Soil" futures? That's just macabre.


They scrapped the idea. Sorry conspiracy theorists.


They scapped the idea because it was offensive.

Commander Lock: Not everyone believes what you do Morpheus.
Morpheus: My beliefs do not require them to.


They say you can predict the weather by looking at Orange futures. Makes sense to me. If you are investing your money, you're going to research as much as you can. SO if all of sudden the Terrorism futures start increasing in value, it's a good indicator that someone knows something is going to happen soon.


They probably scrapped it because it makes for lousy foreign relations. Think about it... if you were president of whateverstan in the mideast, would you want the US 'betting' on whether or not you'd be assassinated? That's not only offensive, it's downright derisive and stupid.


It was offensive. And a lot of people were bemoaning that aspect, so the plug was pulled.

Of course, it also could have been highly accurate. Markets have a way of devining things that individuals do not (see Doogie's orange juice example). Would it have been perfect? No. But it could have added useful information. For those who say "How would you have felt about this after 9/11?" I say you are discounting the probability that something like this could have prevented 9/11 by focusing intelligence resources in the proper areas.

But now we'll never know. On balance, I don't know if the positives would have outweighed the negatives. But we really are being quite proud if we think we're so much smarter than those "mental midgets" who came up with the idea -- all of whom probably have phDs in statistics, economics, data analysis or related areas.


Here's the opinion of Tyler Cowen, Ph.D. in econ, on The Volokh Conspiracy (www.volokh.com):

[Tyler Cowen, 1:35 PM]
Could betting on terrorism really work? Today the Senate stopped DARPA from setting up a market for betting on whether terrorists will strike.

If we had such a market, would it work?

Think of it as a substitute for government intelligence. If you want to know who will win the Super Bowl, check the Las Vegas odds (you wouldn't ask the CIA, even if it were assigned to that task). Why should the best device for aggregating information be any different for terrorism or for that matter anything else?

Here are some criticisms from some prominent Senators.

Which criticisms make sense?

  1. Would terrorists bet on attacks and then carry them out?

Maybe, but they can already do this with current stock markets, if they are at all clever.

  1. Are we allowing some people to profit from the death of others?

Yes, but how does this differ from life insurance?

  1. Would price/betting odds accurately reflect information?

Probably, provided you had a fair number of bettors. Return to the Super Bowl analogy. And the stock market figured out within minutes which contracting firm was responsible for the Challenger crash.

What is the problem then? I see panic as the biggest problem. Say the betting markets told us an attack was very likely very soon. The panic costs might outweigh the chance that we could now react and stop the attack.

Another problem is that the government might use market identities to ferret out possible terrorists (imagine the knock on your door after you win millions), which would bias the betting and thus the odds and resulting prices.

And as one critic points out (see the first link in this post), it could damage our diplomacy, would other countries like that we bet on whether they attack us (just think how sensitive the Saudis are), or what if we bet on when the Saudi monarchy will fall? This could create an information cascade, and hasten events that might better be left postponed.

Jim Bell once proposed the idea of "Assassination Politics," I am told he was thrown in jail for it.


Diesel23: This was brought to you by the same bunch of powermongers who wanted to electronically spy on Americans to monitor "potential terrorists". Yeah right!

The Stasi did that in Nazi Germany. To even think about these types of programs is absurd. Oh how far we've come.

I see you berate the Democrats but fail to mention the Republicans were against it as well. Why is that?

You want to save soldiers lives then bring them back here where they belong. Think of all the troops who would still be alive and have a chance to see their families again if we never went over there in the first place.


Actually guys, this may not be such a bad idea.

Okay, now I've got your attention. While I am against it for a variety of reasons, if you break it all down, its not so far out there as to not at least get some more discussion.

First of all, you need to realize that the idea was put together by a wing of the Pentagon that was created just to be creative. They are supposed to think of ideas far removed from what other groups have been thinking. And thanks to their work, I can send you this message now, because (as I understand it) they were the group to invent the idea of the internet way back in the day.

It turns out that if you look at stock activity in the month, and especially the final week, prior to the 9/11 attacks, somebody not only knew about the attacks, but scored for some big dough as well. I won't go into all of the details, but there was extremely unusual high volumes of put options (bets that a stock will go down)purchased on American Airlines, United, insurance companies and two investment firms based in the WTC. All in all, the unknown investors raked in millions of dollars, some of which was left unclaimed because the SEC caught on to the whole deal. If you would have known to look at it right, you would have known that there was something big going down, but nobody at that point could have put all of the pieces together.

This was not widely reported, but I saw information about this on a Discovery Channel documentary. After looking around for a long time last night, I came across a website that does a better job of explaining all of this. Keep in mind that it is one of these "America knew about it" slanted pages, but they do a good job of citing their sources.


At least give the website a look over and form your own opinion. While a natoinal terrorism options market probably is a pretty stupid idea (we'll now never know), close scrutiny of the options and other stock related markets probaly isn't such a bad idea after all.