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-   -   merged: next hot job occupation: terror trader & discussion of terror trader. (http://www.u2interference.com/forums/f290/merged-next-hot-job-occupation-terror-trader-and-discussion-of-terror-trader-80088.html)

kobayashi 07-29-2003 09:20 AM

next hot job occupation: terror trader
ummm. im not very knowledgable in futures trading but this is absurd. if this is their best idea i think they need to go back to the drawing board with some fresh thinkers.

i understand the attractive efficiency aspects but it strikes me as ridiculous. can anyone rationalize this?


from cnn
The program is called the Policy Analysis Market. The Pentagon office overseeing it, the Defense Advanced Research Projects Agency, or DARPA, said it was part of a research effort "to investigate the broadest possible set of new ways to prevent terrorist attacks."

Traders would buy and sell futures contracts -- just like energy traders do now in betting on the future price of oil. But the contracts in this case would be based on what might happen in the Middle East in terms of economics, civil and military affairs or specific events, such as terrorist attacks.

Holders of a futures contract that came true would collect the proceeds of traders who put money into the market but predicted wrong.
But in its statement Monday, DARPA said markets could reveal "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."

According to its Web site, the Policy Analysis Market would be a joint program of 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.
The Web site does not address how much money investors would be likely to put into the market but says analysts would be motivated by the "prospect of profit and at pain of loss" to make accurate predictions.

Trading is to begin October 1. The market would initially be limited to 1,000 traders, increasing to at least 10,000 by January 1.

sulawesigirl4 07-29-2003 09:23 AM

Is this some sort of joke? Talk about putting your faith in the market. This brings capitalism as national religion to a new all-time low. :tsk:

sulawesigirl4 07-29-2003 11:29 AM

saw some more on this in the New York Times.

excerpts are from Yahoo News


The Pentagon called its latest idea a new way of predicting events and part of its search for the "broadest possible set of new ways to prevent terrorist attacks." Two Democratic senators who reported the plan called it morally repugnant and grotesque. The senators said the program fell under the control of Adm. John M. Poindexter, President Ronald Reagan's national security adviser.

One of the two senators, Byron L. Dorgan of North Dakota, said the idea seemed so preposterous that he had trouble persuading people it was not a hoax. "Can you imagine," Mr. Dorgan asked, "if another country set up a betting parlor so that people could go in and is sponsored by the government itself people could go in and bet on the assassination of an American political figure?"

After Mr. Dorgan and his fellow critic, Ron Wyden of Oregon, spoke out, the Pentagon sought to play down the importance of a program for which the Bush administration has sought $8 million through 2005. The White House also altered the Web site so that the potential events to be considered by the market that were visible earlier in the day at www.policyanalysismarket.org could no longer be seen.

According to descriptions given to Congress, available at the Web site and provided by the two senators, traders who register would deposit money into an account similar to a stock account and win or lose money based on predicting events.

"For instance," Mr. Wyden said, "you may think early on that Prime Minister X is going to be assassinated. So you buy the futures contracts for 5 cents each. As more people begin to think the person's going to be assassinated, the cost of the contract could go up, to 50 cents.

"The payoff if he's assassinated is $1 per future. So if it comes to pass, and those who bought at 5 cents make 95 cents. Those who bought at 50 cents make 50 cents."

The senators also suggested that terrorists could participate because the traders' identities will be unknown.

"This appears to encourage terrorists to participate, either to profit from their terrorist activities or to bet against them in order to mislead U.S. intelligence authorities," they said in a letter to Admiral Poindexter, the director of the Terrorism Information Awareness Office, which the opponents said had developed the idea.

Klaus 07-29-2003 11:54 AM

Is this the capitulation of the secret services? Does the Pentagon trust rumours more then them?
I didn't know that there were many rumours before terririst attacks in general.
Or do some insiders just want to make money out of their knowledge?
Well it is not the 1st of April - but the texts really sound like it.


oliveu2cm 07-29-2003 12:43 PM

Great, now it's even more of a game, where people's silence or bias can be bought even more. :tsk: :tsk: :down:

Scarletwine 07-29-2003 01:16 PM

Headlines today.

Pentagon Abandons Terror Betting Plan - AP

WASHINGTON (July 29) - The Pentagon will abandon a plan to establish a futures market to help predict terrorist strikes, the chairman of the Senate Armed Services Committee said Tuesday.

Sen. John Warner, R-Va., said he spoke by phone with the program's director, ''and we mutually agreed that this thing should be stopped.''

Warner announced the decision not long after Senate Democratic Leader Thomas Daschle took to the floor to denounce the program as ''an incentive actually to commit acts of terrorism.''

Warner made the announcement during a confirmation hearing for retired Gen. Peter J. Schoomaker, nominated to be Army chief of staff.

''This is just wrong,'' declared Daschle, D-S.D.

Klaus 07-29-2003 01:54 PM

I'm glad they didn't do it :up:

verte76 07-29-2003 01:54 PM

I'm glad they're not going to do this. I think the idea really sucks.:mad: :mad: :censored: :censored: :censored:

deep 07-29-2003 01:59 PM

On the face of it, it is easy to condemn this.

I believe this was an attempt to cast a wide net to entrap potential or actual terrorists.

It would be easy to trace online betting or paper betting and see patterns before attacks (insider trading). There are stories that option traders shorted airline stocks before 9-11, disproportionately to normal trading patterns.

sulawesigirl4 07-31-2003 05:22 PM

Actually, according to many analysts, this idea was pretty far-fetched. One commentary by Joseph Stiglitz, a Nobel Prize winner in Economics, may be of interest. Since the LA Times requires one to register, I am posting it in full.


Terrorism: There's No Futures in It

by Joseph E. Stiglitz

The Bush administration's naive belief in free-market economics reached a new level of absurdity this week with the proposal to create a futures market in terrorism. The argument behind the proposal was simple: Information is valuable, and information about a possible terrorist attack is particularly valuable.

One of the often-lauded virtues of futures markets is their ability to bring together disparate economic information and add it up together (or "aggregate it," as economists say).

In a futures market, participants agree to trade, at a pre- negotiated price, commodities that have not yet been produced. Buyers hope that on the day of delivery the price they've paid will turn out to be low — lower than the prices then prevailing on the market -- while sellers hope just the opposite.

Studies have shown that in some instances prices negotiated today on a futures market can serve as a reasonably good predictor of what the price will be on the day of delivery. Consider the futures market for wheat in September. If today's price in that market is $3.39 per bushel, then $3.39 is a good prediction of what the price for wheat will be. Economists refer to this as the "price discovery" function and believe such markets may not only predict the price of corn or wheat but also election outcomes.

Almost 30 years ago, Sanford Grossman and I investigated theoretically the validity of these claims. We focused on competitive markets in which we assumed participants had some relevant information. For instance, a farmer knows something about his own crop, so if he participates in a futures market he will bring his knowledge to bear on that market. Voters who participate in a futures market also bring relevant information — whom they and their friends are voting for — and that is why futures markets may predict presidential elections reasonably well.

But there are severe limitations in the ability of markets to provide accurate predictions; for instance, where markets have few participants and can be easily manipulated, or where there are large asymmetries of information, with some participants (the few large international chocolate producers, for example, in the cocoa futures market) having far more information than others.

Futures markets provide insurance as well as information: They enable a farmer/trader to reduce the risks he faces resulting from the fluctuations in commodity prices. But by providing "insurance" for participants, futures markets can also create the long-noted "moral hazard" problem — the notion that insurance can alter incentives. Someone who has insured his house for 110% of its value has an incentive to set it afire.

What, then, are we to make of the short-lived proposal by the Pentagon's Defense Advanced Research Projects Agency for a terrorism futures market? Did it reflect a brilliant breakthrough, an extension of market processes into an area where markets, by themselves, feared to tread? Or did it represent market fundamentalism descending to a new level of absurdity?

Under the proposal, which the administration disowned almost as soon as it became public, participants would have been betting, in effect — and perhaps profiting — on such potential events as an attack by North Korea or an assassination of Yasser Arafat.

Of course, no one expected DARPA's John M. Poindexter — notorious for his eventually overturned conviction for lying to Congress about Irangate — to approach the problem from the perspective of economic theory. But what was he thinking? Did he believe there is widespread information about terrorist activity not currently being either captured or appropriately analyzed by the "experts" in the FBI and the CIA? Did he believe that the 1,000 people "selected" for the new futures program would have this information? If so, shouldn't these people be investigated rather than rewarded?

But there are more fundamental problems with the idea. If trading is anonymous, then it could be subject to manipulation, particularly if the market has few participants — providing a false sense of security or an equally dangerous false sense of alarm. If trading is not anonymous, then anyone with information about terrorism would be, understandably, reluctant to trade on it. In that case, the market would not serve its purpose.

Now consider the second function of futures markets — insurance. The Pentagon's proposal would have allowed those with the sophistication and money to "hedge" against the threat of terrorism, financially at least, leaving the rest of Americans fully exposed! Though we have come to expect such inequities from the Bush administration's tax policies, surely the U.S. government should be concerned with the exposure of all Americans to terrorism.

Notice that in proposing this idea, at least the Bushies are recognizing the limitations of the innovative capacity of markets. If this is such a good idea, why haven't the markets created it on their own?

Interestingly, the group promoting the idea, DARPA, had — before Bush took over — a credible record of promoting some important innovations, including an important role in the early days of the Internet.

In its own peculiar way, the administration has once again recognized the limitations of markets — as it did with the airline bailouts, steel tariffs and agriculture subsidies. But once again, the lack of intellectual foundation or a firm grasp of economic principles — or the pursuit of other agendas — has led to a proposal that almost seems a mockery of itself.
Oh and in other news, it appears that Poindexter, the mastermind behind this and the TIA thing is going to be resigning. Full story here on Yahoo.

nbcrusader 07-31-2003 05:50 PM

The DARPA is charged with "thinking outside the box". There are probably dozens of proposals that would shock the conscience of any good citizen - none of which would ever be implimented. This happens all the time.

There was probably a political motive behind the release of the proposed program - likely aimed at Poindexter.

pub crawler 07-31-2003 11:22 PM

Hopefully this will be the last we see of the nutcase known as Poindexter. First Total Information Awareness, then this. What a nutjob.

wolfwill23 08-01-2003 12:52 PM

I'd like to discuss the proposed 'Terror Market'
When I first read about this, my mouth hit the floor. The idea that somebody could actually profit on death and destruction is absurd.

However, after thinking about the market a little more, I can say that I wish there was not such a negative knee jerk reaction to the market. I would have liked to have seen futher research into the market and then possibly the eventual implentation of the market.


nbcrusader 08-01-2003 01:01 PM

A better question for the group – how can you create incentives for individuals to prevent terrorism?

The “terror market” seems to be one idea on the subject. The terror market is an awkward and morose way of creating an incentive for preventing terrorism.

A very interesting mental exercise on the subject, but not one that translates well into reality.

wolfwill23 08-01-2003 01:19 PM


Originally posted by nbcrusader
A better question for the group – how can you create incentives for individuals to prevent terrorism?

The “terror market” seems to be one idea on the subject. The terror market is an awkward and morose way of creating an incentive for preventing terrorism.

A very interesting mental exercise on the subject, but not one that translates well into reality.

It seems like this market would not translate well into reality but the fact of the matter is is that we need as much intelligence as possible when you are hunting individuals as opposed to foreign country. I don't think the US Government has enough money, smarts or manpower to get all the intelligence we need to thwart terror attacks and hunt down the animals that commit those acts. If you give 'traders' ("normal" citizens from all over the world) monetary incentives for predicting instabilities and terror attacks, which would translate into actionable intelligence, I think we would have much better insight into what might be coming in the way of attacks.

Get past the "immorality" of it and look at it from a different angle.

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