daniel j. lavigne

http://abcnews.go.com/wire/Politics/ap20030728_1660.html

Pentagon Plan Would OK Bets on Terrorism
Senators Say Pentagon Plan Would Allow Betting on Terrorism, Assassinations

The Associated Press

WASHINGTON July 28 -
The Pentagon is setting up a commodity-market style trading system in which
investors would be able to bet on political and economic events in the
Middle East including the likelihood of assassinations and terrorist
attacks.
Two Democratic senators said Monday they want the project stopped before
investors begin registering this week.
The Pentagon office overseeing the program said it was part of a research
effort "to investigate the broadest possible set of new ways to prevent
terrorist attacks." It said there would be a re-evaluation before more money
was committed.

The Policy ****ysis Market is intended to help the Pentagon predict events
in the region based on investors' information or ****yses.

A graphic on the market's Web page showed hypothetical futures contracts in
which investors could trade on the likelihood that Palestinian leader Yasser
Arafat would be assassinated or Jordanian King Abdullah II would be
overthrown.

Although the Web site described the Policy ****ysis Market as "a market in
the future of the Middle East," the graphic also included the possibility of
a North Korea missile attack.

That graphic was apparently removed from the Web site hours after the news
conference by Sens. Ron Wyden of Oregon and Byron Dorgan of North Dakota
criticizing the market.

"The idea of a federal betting parlor on atrocities and terrorism is
ridiculous and it's grotesque," Wyden said.

Dorgan described it as useless, offensive and "unbelievably stupid."

"Can you imagine if another country set up a betting parlor so that people
could go in ... and bet on the assassination of an American political
figure, or the overthrow of this institution or that institution?" he said.

According to its Web site, the Policy ****ysis Market would be a joint
program of the Pentagon's Defense Advanced Research Projects Agency, known
as DARPA, and two private companies: Net Exchange, a market technologies
company, and the Economist Intelligence Unit, the business information arm
of the publisher of The Economist magazine.

DARPA has received strong criticism from Congress for its Terrorism
Information Awareness program, a computerized surveillance program that has
raised privacy concerns. Wyden said the Policy ****ysis Market is under
retired Adm. John Poindexter, the head of the Terrorism Information
Awareness program and, in the 1980s, a key figure in the Iran-Contra
scandal.

In its statement Monday, DARPA said that markets offer efficient, effective
and timely methods for collecting "dispersed and even hidden information.
Futures markets have proven themselves to be good at predicting such things
as elections results; they are often better than expert opinions."

The description of the market on its Web site makes it appear similar to a
computer-based commodities market. Contracts would be available based on
economic health, civil stability, military disposition and U.S. economic and
military involvement in Egypt, Iran, Iraq, Israel, Jordan, Saudi Arabia,
Syria and Turkey.

Contracts would also be available on "global economic and conflict
indicators" and specific events, for example U.S. recognition of a
Palestinian state.

Traders who believe an event will occur can buy a futures contract. Those
who believe the event is unlikely can try to sell a contract. The Web site
does not address how much money investors would be likely to put into the
market but says ****ysts would be motivated by the "prospect of profit and
at pain of loss" to make accurate predictions.

Registration would begin Friday with trading beginning Oct. 1. The market
would initially be limited to 1,000 traders, increasing to at least 10,000
by Jan. 1.

The Web site says government agencies will not be allowed to participate and
will not have access to the identities or funds of traders.

The market is a project of a DARPA division called FutureMAP, or "Futures
Markets Applied to Prediction." FutureMAP is trying to develop programs that
would allow the Defense Department to use market forces to predict future
events, according to its Web site.

"The rapid reaction of markets to knowledge held by only a few participants
may provide an early warning system to avoid surprise," it said.

It said the markets must offer "compensation that is ethically and legally
satisfactory to all sectors involved, while remaining attractive enough to
ensure full and continuous participation of individual parties."

Dorgan and Wyden released a letter to Poindexter calling for an immediate
end to the program. They noted a May 20 report to lawmakers that cited the
possibility of using market forces to predict whether terrorists would
attack Israel with biological weapons.

"Surely such a threat should be met with intelligence gathering of the
highest quality not by putting the question to individuals betting on an
Internet Web site," they said.

Wyden said $600,000 has been spent on the program so far and the Pentagon
plans to spend an additional $149,000 this year. The Pentagon has requested
$3 million for the program for next year and $5 million for the following
year.

Wyden said the Senate version of next year's defense spending bill would cut
off money for the program, but the House version would fund it. The two
versions will have to be reconciled.

On the Net:

Policy ****ysis Market: http://www.policy****ysismarket.org

DARPA's FutureMap Web site: http://www.darpa.mil/iao/FutureMap.htm

Copyright 2003 The Associated Press. All rights reserved

~~~~~~~~ EnergyResources Moderator Comment ~~~~~~~~~

They are kidding, aren't they?

~~~~~ EnergyResources Moderator Tom Robertson ~~~~~~
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darren rhodes

snip

Not only Pentagon and not only bets on terror - see
http://hanson.gmu.edu/ideafutures.html Darren.

raymonlux

Futures markets can be very good predictors of future events and could
help the intelligence community in stopping these events. The options
market data just about predicted 9-11 and where the strikes was going
to occur. Somebody knew like the Russians, Chinese and others.

The Democrats screaming about this have no idea what they are talking
about. The intent was not to bet on the invent. The idea was to
collect more intelligence in a very clever way.