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Pentagon Lets You Bid on Terrorism?
Elysdir writes "DARPA is creating an idea futures market, the Policy Analysis Market, to try to predict events in the Middle East. See Bloomberg article for more info." Read this article. I mean it. This is amazing.
Update: 07/29 14:45 GMT by J : The
NYT story
claims "The White House also altered the Web site so that the potential events ... that were visible earlier in the day ... could no longer be seen," but those example images are still being served:
Jordanian overthrow,
bidding on assassinations,
cool graphics... Update: 07/29 16:44 GMT by M : Looks like the publicity was too much.
Omigod! Predictive tool, my ass! How desperate have we gotten to keep our economies stable in times of despair? A way to instantly give people an economic boost when tragedy strikes? I thought the balanced budget was a lot to be sacrificing for a stable economy, with these refund checks, but now, we're staking our relations with the world? Like the article points out, ``How would you feel if you were the king of Jordan and learned that the U.S. Department of Defense was creating a futures market in whether you're going to be overthrown." I really, really hope this is a joke...
perhaps the /. paranoia bug has rubbed off me a bit too much, but what are the chances that your "bets" could be used against you in the war on terrorism?
you hit three or four correct terrorist acts and the next thing you know you're in an orange jumpsuit overlooking guantanamo bay.
Mike
This seems like a sleazier version of a 'dead pool'....
Please place all american-bashing statments under this comment. Thank You.
There are no commodities being purchased, and unlike the stock market there is (hopefully) no relation between the actions these countries are going to take and the investors "investing" in the liklihood of them occuring. However, right there is a huge flaw. It seems like a $1,000,000 investment in terrorists bombing isreal could potentially be a good enough reason for someone to bomb isreal.
Visualize the world of wine
I can't wait for a few middle east specialists to start skewing data to make their bets pay off.
"Woot! Car Bomb in Riyadh! That pays 100-1, guess I shouldn't have sat on that report about Saudi terrorists."
If al-quieda sign up will they get taken to court for insider trading?
Working for the (other) man
And you thought that the "short the dying guy" strategy on Hollywood Stock Exchange was a slightly sick game to play.
So this is what they mean when they talk about a "peace dividend". I never realised it was quite so literal.
"I Know You Are But What Am I?"
Look at how unpredictably the stock markets behave already. When was the last time a major drop or surge in the NYSE or NASDAQ was accurately predicted by the majority of investors?
At best this kind of analysis helps you see trends over a long time period, but I don't see how that can help the pentagon except when they ask for more funding (See! Carbombings will increase by 50% over the next 5 years! Please give us money).
I just read this on the BBC. I guess they will automatically arrest the people who get the best predictions as the perpetrators!
Omnis amans amens
They're just looking to nab the people that post "There will be a Jihad and DEATH TO AMERICANS!!!".
Ny Times article (free reg, stop whining) says it's not just for the Middle East. In any event, while I support innovative ways of fighting terrorism (as opposed to wiretapping everyone and giving the president imperium, etc) the idea of making money off of death is exceptionally disturbing.
Says this is another idea from Admiral John Poindexter of, most recently, Total Information Awareness fame. Sounds like he might be a sick sick man.
Karma: T-rexcellent.
Remember Jim Bell? Posted comments to the effect of setting up a system where you can bet on who will be assassinated. He got into deep trouble with the courts who tried to censor any mention of it. Here is some more information.
I think this is all a plot to make sure that the forthcoming film "Trading Places II" is a big box-office draw due to inclusion of lots of explosions, related to this new film being about bidding on military incident futures.
Don't blame Durga. I voted for Centauri.
The reason players and coaches can't bet on sports is because they're in a position to manipulate the system for their benefit. Since every person on earth is capable of such terrible deeds, why should anyone be allowed to wager on them? Doesn't this just promote the things they're (supposedly) trying to prevent? Or is it just capitalizing on an already existing market? (I forget the URL but there is already a site that allows betting on world events - it peaked during the Iraq conflict.)
Rock!
I wonder if everyone simply voted that someone would be assasinated, if some crazy man would say he was obliged to kill him?
I think it could get interesting...
``How would you feel if you were the king of Jordan and learned that the U.S. Department of Defense was creating a futures market in whether you're going to be overthrown,'' said Dorgan, a member of the Senate Appropriations Committee.
I for one applaud this idea. Recent events have shown us that conventional intelligence agencies are out of their depth in the modern world; the CIA utterly failed on September 11th. When lives are at stake, bold thinking is needed. USD 3M is a tiny price to pay if the system enhances the military's ability to anticipate threats to American civilians.
Remember that the Pentagon will already be planning for the eventuality that the King of Jordan is overthrown; that's what militaries do when they're not actually fighting, they make plans. The only difference is that now the military is inviting opinions from third parties, some of whom may well have a better idea of what's going on.
Finally ... a combination of defense and capitalism. I personally think this is a great idea, and want to see more exploration in our country of exotic/non-conventional financial instruments used in very creative ways.
...
What they are doing here is taking the futures markets and orienting them around terrorism. Great idea! Anyone who remembers the mysterious short selling on airline stocks before 9/11 knows that some strange trades always occur in the name of greed.
Many people who respond to this article are going to say "well that's dumb, how can investors predict this stuff?" - they are missing the point. The point here is to allow all sorts of stupid trades, but to notice the weird ones - the ones which eerily mirror intelligence information. If DoD manages to pull off a half-decent TIA system, then this is a very useful component.
It's great that such ideas are being pursued by the government, rather than idle chatter among economists and academics. Somewhat of a shame that all of the ignorant/stupid people out there will shout loudly enough to get this thing shut down, though
Reminds me of the old joke about two efficient-market economists walking down the street. Economist one: "Look - there's a $50 bill on the sidewalk" Economist two: "Don't be stupid, if it was somebody would have picked it up already" I reckon that's about the predictive power of this initiative.
The author of this post asserts his moral rights.
Visit Long Bets if you want to read about and place money on more interesting wagers. And you don't have to worry about Big Brother looking over your shoulder!
It is not April First, is it?
This dogmatic idea that the market is the best model for almost anything in western society is creeping into subjects where the economics laws don't apply. The other side of this is would it be insider trading violation to bet a few mil that Jordan would be overthrown and then spend a few mil backing Jordanian rebels to overthrow Jordan increasing your turn. Capitalism is good, free markets are good, but for a market in statistical data to work the participants need to be involved in the creation of the data have complete intelligence on what they are betting or trading on and have some control of their goods. The subject matters broached do not seem to give them a full free market and not being a fully free market the data will be flawed.
It is not April the first or have I slept through atumn and winter this is just crazy.
I was thinking of the immortal words of Socrates, who said: "I drank what?" - Chris Knight (Val Kilmer)- Real Genius
by John Brunner, in "The Shockwave Rider", based heavily in Alvin Tofler's "Future Shock".
The principle is called Delphi Polling. It is based on the observed fact that the aggregate answers of a large number of people sufficiently knowlegeable to understand a question seem, empirically, to be more accurate than the anwers of any one expert. Even though the answers of any one non-expert may be wildly out, the errors cancel out to a good approximation of the correct answer. Futurologists have been using it for a while to predict trends, and it works better than tea leaves, crystal balls and just plain "informed opinion" i.e. guesses. The USN even tried it with flying a plane, and it worked there too.
Consciousness is an illusion caused by an excess of self consciousness.
"Read this article. I mean it. This is amazing."
I had a spam that started that way once... You don't have a secret job as a 'bulk mailing marketer' by nighttime do you?! *peers closely*
Or actually a bit more like Jim Bell's Assassination Politics, which is a scheme that allows murder for hire under the pretext of a lottery.
Holy Crap.
That's disgusting.
And, on a lighter note: Think of the money you can make taking exotic vacations and causing havok! Insider trading laws be damned, this could be a wonderfully abusable system.
God, I hope this is a joke.
I assert that my comment is only my opinion, not that of any employer, past, present or future.
The 2004 elections could not come quick enough.
Whats the non-US slashdotter's take on this kind of crap? curious...
Our government is basically doing a large scale dead-pool of sorts, classy!
Sehr geehrter Toilettenbenutzer!
The society for a thought-free internet welcomes you.
Ok, our stock markets are filled with lies, greed, and wild speculation. Let's fix that before we apply the same model to something that could take us to war!
"The new approach is to set up, as it were, a `market' in two kinds of futures contracts -- one pays $1 if an attack takes place; the other pays $1 if there is no attack, DARPA said."
I mean, holy shit dude! Rich guys putting bets on whether we'll go to war, then working behind the scenes to make sure it happens, so they get some profit! Christ, every day, I don't understand why I still live here.
$8.95/mo web hosting
The reason why this is sick is because next time you read that some coward terrorist decided to blow himself up on a Tel Aviv bus, killing him/herself and 15 schoolchildren, a gambler somewhere will go make himself a cool $50 because he "bet" on this.
It is indeed a sick world when the response to a suicide bombing is "YES!"
They want the same people who made the dot com bubble decide what happens in the middle-east?
Just tell them about Wi-Fi startups in the middle east and they'll throw money at it...
But, really there seems to be nothing people are not prepared to gamble on these days. I watched a program recently about a company the other day who took bets on whether the stock market would go up or down, same with the housing index in the UK. Despite the disclaimers this sort of gambling is tailored to those with high level insider knowledge.
I want you all to know though then you may feel free to 'invest' as much as you want on a middle eastern state declaring me to be a messianic figure and bringing peace to the region as the first step of my journey to world domination
Do not try to read the dupe, thats impossible. Instead, only try to realize the truth
What truth?
There is no dupe
Isn't that a little like Greenspan running a pool betting on when and by how much the interest rates will change?
there is a similar idea already running online:
http://www.tradesports.com
you can buy/sell futures for most current events- for example, you can buy saddam futures based on when/if you think saddam will be captured, or you can bet on what kobe bryant will be charged with. this is a real site where you can make lose money- crazy stuff.
This is an interesting idea, and it should stay that way.
I'd be afraid that if I were to bet on a longshot terrorist strike and it paid off for me, that the FBI might come knocking on my door (with a battering ram).
This creates an incentive for terrorism by insane individuals.
Remember the case where someone tried to manipulate the stock market by putting cyanide in Tylenol?
I might not have the facts exactly right, but the idea is the same. The potential exists for someone to use this to make money, by finding a way to encourage the terrorist acts to come true.
This is Futures trading. And just like most other non-equity based trading (Bonds, Convertibles, Options) you are simply buying a contract or some sort, not the actual equity (stock), so yes, this is an "investment" but then again, the entire market is gambling really, isn't it?
But of course the implications of something like this are just insane. Because someone put 1MM into a WMD going off in Isreal doesn't mean someone is going to do it. Someone will invest 1MM into this because they are going to do it themselves in the future. Market manipulation. Just like they did pre-9/11.
"Time is long and life is short, so begin to live while you still can." -EV
Rumsfeld: How is it going?
Expert: Not very good.
Rumsfeld: What do you mean, "not very good"??
Expert: Well... The market experts all seem to think attacking Iran is a bad idea, that staying in Iraq is a bad idea, and the probability that G.W. Bush will lose the 2004 election has reached 94.7%
Rumsfeld: All Right! They have told us exactly what the surrender cheese-eqting monkeys don't want us to do! Therefore, let's do it!! Iran, here we come -- let's blast some mullah back to Kingdom come!
Expert: But uh, sir...
Rumsfeld: Great work, Johnson! Keep an eye on those Frenchies and Arabs for us, and you'll get that nice little raise we talked about! Ah, who needs the CIA when you can have contrarian web sites to point the way at the best interests of the USA?!
[Donald Rumsfeld leaves the room with his entourage]
The right to offend is far more important than the right not to be offended. (Rowan Atkinson)
The Iowa Electronic Markets operated by the University of Iowa Tippie College of Business has been n operaton since 1988. It has offered real-money futures contracts for U.S. and other political markets including"Control of Congress" as well as the Democratic & Republican Presidential nominee and the popular vote share, Senate seats, Russian and French Presidential contests, etc.
Speculation can be strictly distinguished from gambling.
The speculator makes a bet on the outcome of a risky event which would exist in the absence of speculators, such as bad weather and natural disasters.
The gambler, finding nothing satisfactory for betting, sets up a slotted wheel, makes six-sided dice, designs cards which are identical from the back but different from the front, and then bets on what happens when these devices are randomized.
Speculation shifts existing risk. Gambling adds to the universal total of risk.
The Pentagon site is speculative.
This is a way for the government to tap the expertise of people who do analysis of the middle east and other areas of the world. It is essentially opening the field to experts who, while they might not have insider information, might have a good "gut instinct" for what's going on.
The Pentagon believes that knowing the probabilities that these people assign to different events will help them predict the likelyhood of those events (if I am reading this correctly)--there is something to be said for that.
As another poster pointed out, this is a kind of gambling. What the Pentagon is interested in, however, is not making money off of it: they want to know the probabilities that people are going to assign.
Will it be useful? Who knows. It has the potential to be and they think it is worth the cost of running such a service, I say let them. I'll be as interested in anyone in seeing how closely these predictions matrch reality.
Integrate Keynote and LaTeX
With media consolidation and trading of event outcomes what will happen to CNN and Fox News prospects for financial growth via "market manipulation". What would an "Enron event" look like with this system in place? I like a good analogy (just look at my handle) but this one better stay inside the Pentagon with the cast of Dr Strangelove.
When the people fear their government, there is tyranny; when the government fears the people, there is liberty.
What a great way to fund future terrorism! All you have to do is load your bets on a target, then go blow it up! Talk about your self-fulfilling prophesies!
"Times have not become more violent. They have just become more televised."
-Marilyn Manson
I am now offically embarassed by the actions of my country.
I wasn't totally behind Gulf War II as my opinion is that if it's UN sanctions, then it needs to be a UN call. OTOH, I am totally willing to acknowledge that there is probably a lot about this I don't know and, therefore, chose to try and keep an open mind.
This however, is basically a country-wide "office-pool" on tragedy. At absolute best, its a ham-handed attempt at data-mining the population and even that is ethically "iffy" in my opinion.
Have we really sunk that low? Damn, I can't even watch prime time TV anymore because lately its all "reality game shows" where people are encouraged to screw each other over for fun and profit. This move by DARPA makes all that look like episodes of "Father Knows Best".
Sorry for the rant, it's just my initial reaction to this article. Maybe there is something about this I'm not understanding....I sure the hell hope so.
A goal is a dream with a deadline
Here's DARPA's FutureMAP website which explains a little more about the idea than the article did. Note that this is a follow-up to a previous, similar program.
"Share your knowledge. It's a way to achieve immortality." -- Dalai Lama
Maybe someone at the Pentagon is trying to learn from this? Remember, greed makes people do stupid things. If some low-level operative knew of an impending attack, s/he might be tempted to make a quick buck on this "futures market".
Theoretically, it seems like an interesting idea (aside from the various moral/political aspects).
The question is: why the Pentagon? Couldn't they have just used a shell company to do this, and accessed the realtime data?
You just nailed one of a major benefits of this system.
.
At the very least, this system would provide statisticians with a massive, currently relevant pool of opinions on the likelihood of any particular kind of terrorist attack occurring. The statisticians may not find anything, but honestly, for the price of running a single secure website, they're gathering an insane amount of valuable data.
That's at the very least. If it does just what it is intended to, and no more. At best . .
At best, it is a honeypot. If something major is in the works, like 9/11, what are the odds that someone, somewhere along the line wouldn't have placed some serious bets? Maybe not the terrorist himself, but what about his family? The people he stayed with in the US? Not everyone involved is going to be a Q'ran-thumping martyr. This scheme plays the self-interest of individual terrorists against the greater secrecy of terrorist proceedings, and it has the potential to be extremely revealing in that respect, simply as a massive, relatively cheap method of adding to ordinary intelligence information.
I mean, honestly, I know it sucks that they might tap your phone because of a $1,000 bet, but if you were just some guy exercising free speech, and proclaimed to the world that you would bet anyone $1,000 that there would be a major biological attack in Israel within the next week, and it got bandied about in a newspaper, your phone would be fuckin' tapped. Nothing happens, they intrude your life a little, and realize you're a crank or a nut or just a weirdo, and they leave you alone. It sucks, but at least this is something you can avoid and expect -- I mean, you do know who is running this thing, right?
# Don't complain about lack of options. We're running out of countries. Those are the breaks.
# Feel free to suggest coup ideas if you're feeling creative. I'd strongly suggest reading the past history first.
# This whole thing is wildly inaccurate. Rounding errors, ballot stuffers, dynamic campaign managers, firebombs. If you're using these numbers to do anything important, you're insane.
PC moderators can suck my White pierced, tattooed dick. If you think pride == hate, s/dick/Aryan meat mallet/g.
The "R" in DARPA is for Research.
From the article: "They have this notion about the predictive capabilities of intelligence,'' he said. ``We think it's absurd; we think when you look at what happened in 9/11. You ought to go on the basis of real evidence from the real world. They have these ideas about markets and predictive capabilities which are more of fantasy land"
It may be fantasy land but DARPA is supposed to research ADVANCED defense related topics. I think this is a good idea and worth investigating. It doesn't mean it should be deployed.
How ridiculous is this? Study after study shows that so called "stock pickers" never do any better than random chance on the stock market. Do you think this is going to be any better? Do you think anyone is capable of making predictions better than chance in this situation? I think not. What amazes me the most is that even though what DARPA is doing flies directly in the face of all the research, they are still investing money in this project rather than spending it in developing statistical models and regression equations which have been shown (by research) over and over again to have more predictive power than humans.
Flame me if you want. But isn't it strange that the US was decrying the Iraqies "inhuman actions" for "bringing out our dead" to show on TV, and then hauling out the dead sons of the enemy.
Remember after Sept. 11th there were reports that the terrorist probably made money betting against the airline industry, and how aweful that was of them (it really was disgusting, don't get me wrong), and now the Pentagon is acting even worse.
I went to battle MC Escher, but drew a blank
Aren't you just so glad that Poindexter is in charge of the department that comes up with such useful ideas?
LE
Actually I would like to see a checkbox on a 1040 form (just as there is one for presidential election campaign funds) for Terrorism funding.
I would like to see voting for tax dollars spent anyway. This would tell how truly popular/provisional government programs are:
Give a multiple choice at the end of each state and federal 1040:
I would like my first 10% of taxes paid to go towards the ________ fund
I would like my second 10% to go towards the _________ fund
and so on.
Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
This could work as an anonymous bounty pool.
Think about it, you're a terrorist or just someone who's heard about some terrorist act. Sure, you could walk to the closest US embassy and tell the CIA representative what you know. But this option has many drawbacks. You don't know how the CIA guy will reward you; and if someone sees you entering the US embassy, you're history.
Now with this system, you just connect to the net, bet $100 on "suicide bomber blows Knesset" (for instance); and anonymously reap your 10 or 100 thousands.
But since the purpose of this program is to prevent terrorist attacks, they have an issue here. What happens if your bet on "suicide bomber blows Knesset" warns Israeli security and enables them to prevent the attack? Do you still win? If so, what defines the ocurrence of the attack that you predicted? Who decides? If not, the system won't work since betting on some event will reduce its probability.
But the main issue is anonimity. You need to be sure that you can place your bets and collect your cash anonymously. Nobody wants his house to be targeted by a tomahawk missile. And who will trust the Pentagon's terms and conditions?
It would be nice to be sure of anything the way some people are of everything.
The book Blind Man's Bluff also gives a detailed account of how the lost submarine USS Scorpion was located. All the experts could only narrow it down to a 20 mile radius. With no other options, they resorted to taking real money bets from other submarine commanders on the probabilities of different scenarios. Result? The submarine was found within a couple hundred yards from where they guessed.
Can you imagine some Navy officer going to his superiors at the Navy and explaining that we're going to try and find a submarine by having a betting pool on it? It sounds completely insane, and personally I can't believe anyone had the balls to suggest it. But it works. When people have a skin in the game, they tend to give their best, most honest appraisal. If it was up to me, I would require intelligence analyst types to participate in this kind of thing.
Interesting.
See my journal, I write things there
This would an open market. Therefore, you get more than just legitimate experts, you get everybody who wants to participate. Given the rather transparant nature of this data-mining effort, there is a very real possibility that this data could be obfuscated or otherwise manipulated by a coordinated effort. Its always easier to destroy than to create and borking this data pool would be a destructive act.
I'm sure DARPA has experts by the boatload. Furthermore, there are more secure/reliable ways to gather this information in my opinion.
A goal is a dream with a deadline
It's amazing how the majority of /. readers miss the point of this system.
Futures-type markets are remarkably good at predicting future trends because they are essentially the consenses of thousands of people, who are confident enough in their outlook to put money on it. Because of this, the Pentagon launched this research project to see if they could harness that power in predicting terror. The point is not to make people rich off of terror attacks or assassinations, the point is to try to know where to focus your efforts in preventing such an attack.
Now as to whether it will work, who knows? If the investors know that the goal is the prevention of the events, therefore no payoff, will they put up the money? How will individual investors know the likeliness of various scenarios if they don't have access to top-secret intelligence, so therefore how accurate can they really be? It remains to be seen.
But again, this is only a RESEARCH project, to see if such a system is feasible, it isn't like we're betting the future of terror prevention on this.
By reading this sig, you agree to the terms of my sig license.
The problem is, what I would want to happen is not often what I expect will happen. Give me a real way to influence policy makers instead, and I'll be much more happy.
Employee of Inrupt, Project Release Manager and Community Manager for Solid
For any given attack, there are going to be a lot of people who know about it beforehand. Some of those people are going to be stupid enough to try to profit on it.
When the futures fluctuate dramatically due to the new 'interest,' everyone at the pentagon knows that something is going to happen. The SEC uses it to catch insider trading, the NCAA uses it to catch game fixing. Q: Why can't the government use futures to catch terrorists?
A: Great idea, bad diplomacy. Hello! This is the US government we're talking about! We don't care how the rest of the world feels anymore.
I find this akin to Hari Seldon's theory of psychohistory. A statistical measure of future trends in human behavior. This could be a vary primitive form of that science, or a key device in its theory. A very efficient way to model large, turbulent systems is to use a statistical representation of the system.
.COM IPOs and SCO stock would not be rising. A few years ago, the IRA would have had even stakes with the Middle East. You would have lost your shirt with a speculation on the Shamrock Isles. Of course, longterm speculators are still camping in the desert.
The problem is contaminating the with the notion of money. Bias such as a monetary gain will skew the results of this framework and make the statistics unreliable. If this were a purley academic persuit, I would jump at the chance to participate. I would love to work on a project like this.
Consider: How many times have you had a discussion with a group of people and either one person came up with an odd ball idea or as a group you decided on some conscensus on an idea. Say that idea was a speculation on a future innovation or maybe it was just a guess on the next person to kick off in a death pool (I think those are creepy.) That would be with maybe 10 people. Consider 1,000,000 people doing the same thing. But how for them to all communicate and what about the lone oddball idea that may never make it above the din? Give them a market in which to speculate.
A market is like a conglomeration of thoughts and ideas. It takes on a life of its own when people speak of the market. While individual investing schemes may seem choatic, the overall market has a general trend. In the 90s, a surge to tech stocks and telecom. Now, a trend away from those to more stable options. Here is the most important part. While the stock market is money driven, this prediction market would have to be idea driven. Make a good speculation and you have the satisfaction of supporting the system, getting it right and helping the DOD. A bad speculation only means you are still supporting the system.
Making this nebulous, allocating speculation points instead of dollars, removes the problems I have seen people sight so far. It is no longer betting, you cannot have terrorist insider trading and people on the inside will not sit on inside information (CIA) to turn a quick buck. Why is this like Psycho History? Its a statistical conglomeration of speculation on the future. If you think it will not work, you need to review how much the Stock Market has grown since its inception. Growth translates to correct predictions in the Stock Market. Its alteast worth a try.
Of course its not perfect. Otherwise, nobody would have fallen for inflated
The cancel button is your friend. Do not hesitate to use it.
Be Paranoid, be -vary- paranoid (or NOT! have plans)
I am glad they finally listened to one of my friends'
ideas from a couple years ago. So, I am not worried,
when my friends go to Guantanamo, I go to Canada,
wait for the invasion, then head to France, before
being forced in to hiding in the Tibet border region
until the end of the war.
I have my travel/vacation agent already working out
the cost from here to Tibet. The return trip I was
told was not possible to plan, because there was no
confidence which currency would be available and/or
predictable for prices and my travel agent did not
expect to be anywhere around for business.
OldHawk777
Reality is a self-induced hallucination.
Unaccountable leaders are masters, and unrepresented people are slaves. How do US and EU fare?
I once saw an episode of COPS where they sent out contest-winning announcements to people they'd been trying to arrest for awhile, but never seemed to get able to get their hands on. The people gladly showed up to claim their prize where they were promptly arrested.
... shares were repurchased at a drastically lower price ... and terrorists probably gained financially from information they had about the upcoming events.
... waiting for the terrorists to come claim their prize.
Post 9/11 there was a lot of evidence indicating that there had been a great deal of activity short-selling holdings in the airline industry. 9/11 happened
Translate that to this futures market. The very nature of this market can serve as an indicator for future terror events. Every major investments will serve as a lead for investigators to track where the money is coming from to see if there are terrorist ties. The feds may be allowing the average Joe to gamble on terrorism, but they're also opening the door
The Register have an article on this here: Kill a Middle East head of state, win prizes! - Pentagon shows how
This is the science behind it
I dunno, how is betting on a futures market like this any different from betting on, say, Northrop Grumman to produce the next generation of B-2 stealth bomber for the US military? Both terrorists and stealth bombers have been known to kill innocent children.
True, when you buy stock in Northrop Grumman, you're not betting on a terrible tragedy like a suicide bombing -- I'm exaggerating for effect. But if the moral outrage on /. is that this money is used to bet on the death of innocent people, then perhaps we should all re-examine the nature of the US's stock exchange with regard to weapons manufacturers and other companies that make products that kill people (Philip Morris maybe?).
I really, really hope this is a joke...
Even senators thought this was a joke so you can be excused for thinking so. See the bold text from the rejected submission below - it's from the NY Times article.
Poindexter's Middle East Terror Bookie Scheme
2003-07-29 08:16:21 Poindexter's Middle East Terror Bookie Scheme The NY Times reports on DARPA's latest scheme: an options and futures trading market where you can bet on assassinations, toppling governments, instability and war in the Middle East (Google). The $8 million program is under the control of Admiral John Poindexter who brought us Total Information Awareness. The Policy Analysis Market starts taking registrants this week and betting/trading begins in October. Senator Byron L. Dorgan of North Dakota, said the idea seemed so preposterous that he had trouble persuading people it was not a hoax.
Why does this sound eerily like a government-sponsored version of Assassination Politics, the piece written by cypherpunk/crypto-anarchist Jim Bell, who is now suing the government under RICO to get his freedom because they conspired against him?
Basically, his idea is the same thing, except people would be buying futures on the death of political personalities. It's strange, it's a bit fringe, it's not liked by the government except for when they use it for their own plans.
I do what the voices on my console tell me to do.
I was listening to a spokesperson from the Economist on BBC this morning, defending the Economist's involvement. She mentioned that there was a $100 limit (per bet, i believe?)
So, no one is going to make millions blowing up buildings...
The facts have a liberal bias. --The Daily Show
The oil isn't going to last forever. This is a perfect investment opportunity for rich Saudis funding the terrorist activities. Talk about win-win -- kill infidels and make your money back, courtesy of the US government.
1. Train fanatics in suicide bombing
2. Invest in appropriate futures
3. Execute the attack
4. Profit !!
Tired of being "punished" by the Slashdot $rtbl since 2002. I'm now over at http://soylentnews.org/ .
Yes a predictive tool. Basicially, this a way to measure the current "worth" of a particualar idea by using a market-type game theory. As ideas become more likely, their worth rises so they will be bid-up by the masses (of analysts). The most likely will float to the top. The theory is that no one person has perfect (or infinite) insight and information, but thousands of people - each acting independently in a common market - will distill some insight by their collective action. That is classical political-economic theory.
Take the "money and morality" part out and you can see the academic value in a theory like this. Can anybody suggest a better option? Perhaps a bunch of ivory-tower professors and analysts making wild-a** guesses (WAGs) around a conference table? Which WAG is more "valuable" than the others?
It occurs to me that since international events often impact stock prices, people interested in mitigating the risk to their investments could use this market to hedge. For example, if I have a big stake in a company whose fortunes would be adversely affected by terrorism in Israel, I could place a bet *for* terrorism in Israel. That way if it happens, my losses in the stock market will be partially offset by my profits from this futures market. If it doesn't, I'm out the money I put into the futures market, but that's the nature of a hedge.
My bet on terror in Israel will probably also alter the odds on that issue, which may encourage the U.S. (and others) to work harder at preventing incidents in Israel, which is good for my investment. As such, a market like this will probably encourage the U.S. to work harder to manage threats which are financially dangerous, rather those which are dangerous to people. I'm not sure that's where we really want to go, but then again I doubt this market would be used as the sole basis for decisions, and it could be useful as long as its biases are understood.
As others have said, the real problem here is what happens when bettors have the ability to influence the outcome of their bets. Terrorists could potentially fund their operations by betting on long-shot attacks and then carrying them out. The dynamics of that would be interesting in an intellectual sense:
The answers to those questions might be interesting, but the potential cost of "wrong" answers, in terms of lives and property, could be huge. Speculators trying to make a quick buck voting against terrorism or investors trying to hedge against terror-derived risks could actually end up *funding* the mayhem.
I suppose one way to mitigate this risk would be to carefully vet all potential bettors and verify that they have no potential ties to terror. This wouldn't be completely foolproof, but if done right it would pretty much eliminate the risk of terrorists profiting from the market in a big way. The cost of doing it right, however, especially if the pool of bettors is worlwide, would be staggering.
There are so many implications and counter-implications that it seems impossible to predict with any accuracy what the effect of this system will be.
Perhaps we should bet on it?
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
They have never released any information on the parties who purchased the put options on the airlines and the company that covered the insurance on the WTC. Info is just sitting there waiting to be discovered on this. It would be very simple to track down, but it has never been done. This cover story that the options have never been claimed is rubbish. The options had to be bought from a trading account or brokerage somewhere in the system. It's like saying you have a check in your hand that hasn't been cashed and claiming that you can't look at the account number on the bottom of the check and tell who wrote the check.
There isn't any "science" in that article. Just unsubstantiated claims.
They ignore the most basic factor in this equation.
The people with the most knowledge may have an interest in hiding that knowledge.
The easiest way for them to do so would be to artificially inflate a completely different scenario to focus attention on that item.
Like bidding up an attack on Egypt on a certain day. When the actual event will be the assassination of an Israeli government official.
Why buy airline options *before* 9/11? The share prices for airlines fell after 9/11 if I am not mistaken which means that the price of options would have fallen after that date.
It is a *PUT* option. It is a promise to sell the buyer the stock at a given price on a given date. As the seller you are betting that the stock will be *lower* than the price you promised to sell at, the buyer is betting that it will be higher. If the stock plummets you make money.
Omigod! Predictive tool, my ass! How desperate have we gotten to keep our economies stable in times of despair? A way to instantly give people an economic boost when tragedy strikes?
The ability to hedge against disaster has kept America strong for many years. Farmers use futures to protect against natural disasters and other problems, locking in profits regardless of crop yields. Insurance companies use futures to protect against natural disasters and partially fund payouts for hurricanes and other catastrophes.
The economic need for such a tool is real and not in the least bit evil. The fact that this could also have powerful, tangible benefit to those in a position to stop these disasters from happening is an awesome second advantage.
I see no reason why this isn't perhaps the most sane and intelligent thing that our intellligence agency has ever tried to do. Even if they are doing the "Dr. Evil" about it, it will still be a powerfully benign force.
The reason that it can be true that 1+1 > 2 is that very peculiar nonzero value of the + operator
it was originally slated to become a piece of TIA.
This is interesting if only because funding for the TIA was cut by Congress in the 2004 Defense Appropriations Act and killed by the Senate's 2004 defense appropriations bill recently.
Does this mean that TIA will be built through the back door with many much smaller projects instead of one massive project? The smaller projects could be linked and analyzed via a separate piece of analysis software. Commercial business intelligence and data-mining tools could probably do the job with a little modification.
It sounds a little like the title of that old Don Henley song, Building the Perfect Beast.
As reported in Yahoo News The Pentagon has Abandoned its plan for the Terrorism Betting. My favorite quote from the story:
"The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque," said Sen. Ron Wyden D-Ore.
It shows that the stock market had effectively decided which shuttle contractor was responsible for the Challenger disaster within minutes of seeing the explosion come across the news wire.
Here's the citation:
Michael T. Maloney and J. Harold Mulherin.
The complexity of price discovery in an efficient market: the stock market reaction to the Challenger crash, Journal of Corporate Finance, Volume 9, Issue 4, September 2003, Pages 453-479.
http://dx.doi.org/10.1016/S0929-1199(02)00055-X
The idea was proposed way back by John Brunner in his book "Shockwave Riser" (highly recomended -- also read "Standing on Sansibar"). It's called a "Delphi Poll" or "Delphi Pool" (both terms seem to be in popular use), and there have been numerouse attempts to implement this (which usually failed because auf lack of betters).
The Idea is quite interresting, especially with respect to the concept of self-fulfilling prophecy: if a number of people have bet a large amount of money on some future event, they will try to make it happen...
I have discovered a truly remarkable sig which this 120 chars is too small to contain.
Looks like the images are gone/slashdotd/censored... so here's a mirror
Jordanian overthrow,
bidding on assassinations,
cool graphics...
--
What is the sound of this sentence?
I'm considerably more Libertarian than the next guy, but you need to take the tin foil hat off for this one.
A futures market like this is just an efficient, effective tool for measuring the likelihood of something happening. It's essentially a datamining technique where you have a large number of intelligent actors processing information for you and coming together to find a market-clearing price. From this price, you can back out the likelihood of the event occuring.
This is nothing more than an application of sports betting or like the Iowa Electronic Markets, which I understand are good predictors of election results.
Alas, I'm afraid some of the more fanciful suggestions here will not come to pass. Do you really think a terrorist would be foolish enough to trade large on a DoD futures market right before committing some act? It would seem silly to do that with your DoD account when you could just sell airline and insurance stocks instead.
A market like this is not going to be sufficiently liquid for someone to either hedge the risk of an event or profit much on one.
That is, if you came to the market and tried to buy $3 billion worth of "Chippewa Falls destroyed by fire and brimstone SEP '03" futures, you'd probably spook the market and wouldn't find any profitable edge.
If I were the King of Jordan and I found out people were willing to pay $97 for a "King overthrown by December" I'd be pretty damned greatful for the head's up. It's like a free opinion poll.
And...except that it might be government sanctioned (though it would be easy enough to have an outside firm run the market), this is not different than betting sites making markets on whether Saddam will still be in power.
TIA sucks. But I think this is a not-so-novel, but pretty ingenious thing that really doesn't trample anyone's liberties.
When the futures fluctuate dramatically due to the new 'interest,' the Pentagon won't be the only one who knows. This system essentially lets terrorists know the probability of success of a given terrorist action before they launch it. They can see which of their plans have leaks and which do not, and use that data to organize more effectively.
This is an idea which Has Not Been Thought Out.
He who refuses to do arithmetic is doomed to talk nonsense.
But that's exactly where this hare brained scheme fails...someone puts up "japan subway bombing", but do they do that on the basis of knowing such a plot exists? No! It's sucked right out of their ass! It's pure conjecture....and the DoD is hoping pure conjecture will somehow magically change into fact!
/and actually thinks it will work!/ doesn't deserve your confidence.
And their mechanism for that is a bunch of idiots betting on randomly selected plots. Not actual intelligence, ears on the ground, but pure fiction mixed in with some intel and voted on by people who think they can make some money!
I mean, how dumb can you get? The poor programmers working on this must either be laughing or crying...and I'd hope the latter.
This is wrong on so many levels I'm struck into incoherence just trying to organise all the points which are wrong/dumb...so many are forming in my mind that I can hardly put them into order.
And this was voted through! Shit, just run a plane into the whole DoD/Darpa/Pentagon and the House (of Representatives?) and restart the whole system from scratch...a system which brings forth something like this
And as an aside, I wonder how long it will take until the first 'bet realisation contracts' [=pay us and we'll make it happen] are up on ebay...
-- Waht? Tehr's a preveiw buottn?
I'm only going to say this once, but I'm going to say it loudly.
You sure as fuck weren't watching the implied volatility and put/call ratios on airlines the week before 9/11.
If you don't know what that sentence means, you need to do some research. A lot more research. The story has since been picked up by conspiracy theorists, and the signal-to-noise ratio is pretty much nil. Dig back to September and October 2001, and read the financial press instead. You can find a lot of good starting points in the comments of this Slashdot article.
For the record, I believe (on circumstancial evidence - namely the rapidity with which the story was buried, leaving only conspiracy theorists to increase the noise-to-signal ratio,) that the SEC did the Right Thing - turned their conclusions over to other organizations who could ensure that the Right Thing (namely, outside of SEC jurisdiction) would eventually get done.
Also for the record, as I don't have a need to know, I can only hope that my speculation outlined above is correct. I do look forward to finding out when it's all declassified some decades hence. Gonna make for some damn interesting reading.
Some other poster mentioned put options on airlines in the wake of the 9-11 terror attacks. But if you saw the S&P 500 futures, you would know that when they reopened for trading after the attacks, the opening gap was tremendous, IIRC about 60 points. That's $3000 profit for a short Emini contract, which is traded electronically and requires less than $4500 margin (varies by broker). The big boy S&P 500 contract is $250 per point, so 60 points = $15,000 profit if you were short.
The important factor is the SIZE of the S&P futures market. It is huge and could easily absorb any short selling by Osama bin Laden without missing a beat.
The other Mideast futures lesson is what crude oil prices did during the outbreak of war in the first Gulf war. IIRC, the prices had been going steadily higher and when the airstrikes began, prices dropped $10 VERY QUICKLY. Crude oil futures trade 1,000 barrels, so you pocket a nice $10,000 if you were short. I've often thought the thing to do if you were Saddam was to go long on crude futures, do some sabre rattling, and then cash out with a nice profit...
pot.kettle(black);
This has been around for quite a while now...
http://www.ideosphere.com/fx/
Trust not a man who's rich in flax / His morals may be sadly lax
I disagree. If people want to invest their money solely on the basis of CNN and Fox, they are more likely to lose it. That will improve the market because these investors will have less money to invest and be more interested in research. There are tons of information available about the countries of interest - most of us don't have time to keep up.
Remember, intelligence agencies have a very bad track record at predicting future events. That may be because the incentives affecting an individual employee reward political conformity rather than correctness. The Cold War was largely shaped and perpetuated by the flawed intelligence of the CIA and KGB.
The proposed system creates a class of analysts with an incentive for accuracy. And having their own money at stake will harness the analytical powers more effectively.
In the big picture, Enron-type disasters are needed to discipline the market. Likewise, this events market would make some mistakes. Maybe after losing a few thousand dollars people would learn not to predict events based on their political beliefs or what they saw on TV.
Actually, it's the other way around:
If A sells B a put option on American Airlines with a strike price of $10, A is giving B the right to sell one share of AMR to A at $10.
If the stock goes down, say to $3, B can go into the open market, buy a share at $3, and then immediately sell it to A for $10, netting $7. (In reality, options aren't settled this way - A just pays B $7 directly, B doesn't have to buy the stock and then resell it).
In the scenario described above, B is betting that the stock will decline, while A is betting that it will stay stable or rise.
You described selling a call option, which is also a bet that the stock will go down. If A sells B a call on American at a $10 strike price, then A has sold B the right to _buy_ a share of American from A at $10. If the stock drops below $10, the option is worthless (B would be insane to buy a share from A at $10 if he can buy in the open market at $5). If the stock goes up to $15, then B can buy the share from A at $10, and sell it in the open market at $15, netting $5. In this case, A is betting that the stock will decline, while B is betting that it will rise.
The both buying a put and selling a call are bets that the stock will decline, the two have different risk profiles - if you buy a put, the most you can lose is whatever you paid for the option; if you write a call, your losses are technically unlimited (i.e. you sell a call at $10, and the stock goes to $1 million a share - you're on the hook for $999,990 per share).
As we New Yorkers like to say: fuckin' A.
... the trail went to a German bank, and I couldn't find any more info than that.
In the week before 2001-09-11, the volume of options traded on UAL (United Airlines) and AMR (American Airlines) was 500% of normal. 500% is not a blip. It's a huge freaking spike.
I didn't get these numbers from some.conspiracy.theory.org, I got them from cboe.com: the Chicago Board of Options Exchange, the official clearinghouse for options in the USA.
As for who did it
I agree with the parent. This was the smoking hot $40 million money trail and it dropped off the news radar within days.
"Follow the money" -- Deep Throat
to bet against things that you know most people would bet on? For example, if one of the questions were "Will New York city fall victim to a terrorist attack in the next 5 years?" I would think that most of the "investors" would vote "Yes" on this. The government would see this, flood New York with FBI agents, and probably prevent an attack from happening. Knowing this would be the sequence of events, I would bet against this happening...easy money.
For the record, the Conspiracy Theorists (a simple Google search will confirm) have made the connection between Deutsche Bank, who processed these transactions, and our current Executive Director of the CIA, A B Krongard - who founded A B Brown, which was bought by Deutsche Bank, he remained on as a director.
Now, while this has a distinct odor, it's nowhere near "smoking gun". I'm just wondering what a big invenstment banking director has, in the way of experience with the Spy Business, such that he lands a cushy job with the CIA? I mean, what are they teaching these bank directors anyway? Is it the fancy sports cars, or what?
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
And I think they will probably do just that eventually.
Or - they won't even have to. Someone else will and they will get all the intel they need by monitoring the prices.
Foresight Exchange uses play money for betting on real world events, including politics and catastrophies.
In early September 2001, they estimated a (around) 40% probability of a major act of terrorism in the US.
__
Men with no respect for life must never be allowed to control the ultimate instruments of death.
GW Bu