Interesting that reference.
I suspect a greater insight and utility comes not from one off individual events, but on futures on more complex, less crisis driven topics - and with a skew to expertise it might have more interesting results.
What of the danger of self-fulfilling prophecy?
Let’s say I’ve got a lot of money riding on a particular nasty event happening. What’s to prevent me from using my resources and contacts to…help things along? (Insider trading of a very ugly sort.)
Could this market actually give impetus to terrorist acts?
Even if (in my scenario) authorities see a spike in the market and defeat the threat, they are using resources to battle a problem the market itself may have created.
Perhaps I am missing something. If so, enlighten me.
I haven’t read much about it, so I’m kind of shooting from the hip here, but I think that this is a red herring. I have no idea what for, though.
I don’t know about this. In theory futures trading in commodities tends to stabilize the production of them. That is, when futures prices begin to rise, producers increase production which they sell in advance on the futures market and vice versa when futures are low. It doesn’t always work but it seems to help.
Where are the producers in this “futures” market?
I only read this article but this sounds like the stupidest idea yet from this Administration. Their are outdoing themselves every day.
Unbelievably stupid sums it up for me pretty nicely.
Perhaps, but note that when it gets to be such a point, the impetus behind the government to investigate will be large, which in turn would (as I understand it) cause the prices of the futures to drop since the probability of it happening starts to decrease.
Because aggressive agencies can respond to the, shall we say, bubble, that might be just the element necessary to stop a bubble from popping in the worst way.
I know I should know this stuff, but I don’t: isn’t this a contingent market, not a futures market?
If memory serves me correctly, there is at least a small but internationally distributed contingent that suspects that US Defense and other elements of the Administration were aware of the likelihood of the 9/11 attacks and that preventing them wasn’t high on their priority list.
I would not think that playing “Gamesters of Triskellion” demonstrates the sophisticated handling of international concerns and awareness of appearances that…
::considers prior behavior of current administration::
Oh never mind.
From the Washington Post story:
It goes on to say that that graphic was apparently removed from the Web site within a few hours after Sens. Wyden and Dorgan had their news conference. But apparently Poindexter & Co. were actively entertaining the prospect of having such “lurid contracts” in play.
My main reaction to this is just the incredibly mindboggling stupidity, in foreign policy terms, of these people being willing to run a gambling parlor under the U.S. government imprimatur in which such bets could be placed. I bet a lot of U.S. ambassadors across the Middle East are going to be called in over the next day or so and asked to explain WTF the U.S. government is thinking here.
I think there is information to be gained from such a market, once, ummm, personalized outcomes are defined as out of bounds for trading, or similarly, outcomes specifically involving bloodshed (think of how families of US military would react to a betting line on how many soldiers get killed in Iraq in a given time period :eek:), but boy howdy, did these guys ever put their foot in it.
And Tom DeLay says the Democrats lack seriousness on foreign policy? Sheesh.
The real world already has some of this, in the form of trading in gold and in U.S. Treasuries, both of which have a safe haven element attached to them. It’s what traders run to when things look uncertain/bad.
Interestingly, gold bottomed in late winter 2001, or a little more than half a year before 9/11. As Yogi Berra once said, you can see a lot by looking.
Chart attached (artificially constructed for illustration, don’t try trading off this chart):
So the issue of whether people are profiting from disaster is moot. Some already do, whether by accident or design. That’s life.
DARPA has an excellent idea here, because when people have real money on the line, they start getting good at making predictions. There could be a lot of useful info in the trading patterns.
Hmm, can’t seem to edit that link to get it to work. If interested, cutting & pasting into the browser address line will have to do for now.
Retired futures trader and long time marketmaker in futures-style betting here:
Leave it to the academicians to fuck up the practical application of everything. First off, it won’t provide the intelligence community with anything they don’t already know unless a terrorist is sufficiently stupid to bet on one of his own acts. Even in this case, the liquidity of the market would have to be deep enough to allow for a bet large enough to make it worth even taking the risk.
The trader structured contracts idea is a disaster. There’s a reason that futures contracts are standardized and that’s so people don’t argue over the meaning of the terms. The contracts on their “indices” are fine but are also much less specific in exactly what they’re prediciting. One of the futures contracts they speak of is “Will the current Iraqi regime be in power at such and such a date?” - you need to define this in so many ways to make it bettable. What do you mean specifically by “regime?” What do you mean specifically by “in power?”
The predicitive power of futures prices are dependent upon those with the best information participating in the pricing. This won’t be the case here.
Yes, but you’re missing the point:
The agencies would be responding to a terrorist event which the market itself created.
Remember the Chicago Black Sox. Now imagine how much worse market manipulation in the context of terrorism futures might be…
Thanks December, for helping with Bayes.
Pre-investors… Looking at the scheme, doesn’t it fail, as a viable investment, for the following reason.
All Investment could be factored into information that relates to the probability of any event occirring. That is after all, what they are looking for -another means of predicting events.
Would this be true then. -The more probable events (most investment activity) would generate higher interest. The higher interests would generate higher probabilitie scores for those events - which would generate more scrutiny, and if appropriate, - result in refocusing assets to prevent or reduce the probability of the event occurring.
Isn’t this like betting on a race horse, but -not knowing that the horse is having 10 pounds of additional weight added to its back, each time a bet is cast on it?
More bets would act to decrease the probability of the event?
Bad Medicine?
Ah well - it’s been spiked anyway.
Oops, didn’t see RTFirefly’s post.
I know it’s all (see above) off but wasn’t it oft-said, that OBL and the crew made a fortune on the markets post- 9/11 ? I never did follow that story much … . . .?
IIRC, there were considerable unusual trades happening, which included selling short on airline stocks in the week(s) before the attacks, that were “being investigated”. I’ve heard nothing about this since.
It’s probably laid out in the missing 28 pages of the 9/11 report.