This is now old news. Most of you, by now, are aware that there were plans within the Pentagon to develop a "Futures Market" on terror. I would hope that ALL would agree that from a moral and ethical point of view, this is just darn-right wrong.
Below are two articles regarding this hopefully ill-fated plan. The first article give a brief account of the plan. The second is actually a commentary/opinion calling for Mr. Poindexter's resignation.
I question the moral and ethical judgement of A LOT of decisions made within this current administration. Although this particular plan/event probably can't be blamed on the Bush Administration, I believe it's this particular administration that has kept Mr. Poindexter working within the walls of the Pentagon.
Pentagon Abandons Plan for Futures Market on Terror
July 29, 2003
By CARL HULSE
WASHINGTON, July 29 - The Pentagon office that proposed
spying electronically on Americans to monitor potential
terrorists has quickly abandoned an idea in which anonymous
speculators would have bet on forecasting terrorist
attacks, assassinations and coups in an online futures
Deputy Defense Secretary Paul D. Wolfowitz said today that
the program would be dropped. And he asserted that he first
learned of the Pentagon-sanctioned futures market through
news accounts today after two Democratic senators disclosed
the concept on Monday.
"I share your shock at this kind of program," Mr. Wolfowitz
told the Senate Foreign Relations Committee. "We'll find
out about it, but it is being terminated."
Senator John W. Warner, the Virginia Republican who heads
the Senate Armed Services Committee, said today that he had
conferred with the program's director at the Pentagon, "and
we mutually agreed that this thing should be stopped."
The discarded program was met with astonishment and
derision almost from the moment it was disclosed.
In the proposed futures market, traders bullish on a
biological attack on Israel, say, or bearish on the chances
of a North Korean missile strike would have had the
opportunity to bet on the likelihood of such events on a
new Internet site established by the Defense Advanced
Research Projects Agency.
The Pentagon called the idea a new way of predicting events
and part of its search for the "broadest possible set of
new ways to prevent terrorist attacks." But the two
Democratic senators who disclosed the plan on Monday 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
But by that time, Republican officials in the Senate were
privately shaking their heads over the planned trading. One
top aide said he hoped that the Pentagon had a good
explanation for it.
But it seemed obvious today that no explanation would
suffice politically. Senator Bill Frist of Tennessee, the
Republican majority leader, said as much in a letter to
Senators Warner and Ted Stevens, the Alaska Republican who
heads the Appropriations Committee.
"I cannot conceive of any reason why the United States
should be involved in a project of this nature," Mr. Frist
Senator Pat Roberts, the Kansas Republican who serves on
both the Intelligence and Armed Services Committee, called
the market plan "absurd" and added, "It seems to me they
are way off base and somebody should bear that
responsibility, and I think we know who that is."
The Pentagon, in initially defending the program, said such
futures trading had proven effective in predicting other
events like oil prices, elections and movie ticket sales.
"Research indicates that markets are extremely efficient,
effective and timely aggregators of dispersed and even
hidden information," the Defense Department said in a
statement. "Futures markets have proven themselves to be
good at predicting such things as elections results; they
are often better than expert opinions."
But it became abundantly clear this morning, at the hearing
of Senator Warner's committee, that whatever the logic of
the Pentagon's position it had no chance of surviving
"I must say this is perhaps the most irresponsible,
outrageous and poorly thought-out of anything that I have
heard the administration propose to date," said Senator Tom
Daschle of South Dakota, the Democratic leader.
According to descriptions given to Congress, available at
the Web site and provided by the two senators, traders who
register would have deposited money into an account similar
to a stock account and win or lose money based on
"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
"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.
The program, called the Policy Analysis Market, had
intended to begin registering up to 1,000 traders on
Friday. It instead became the latest problem for the
advanced projects agency, or Darpa, a Pentagon unit that
has run into controversy for the Terrorism Information
Office. Admiral Poindexter once described a sweeping
electronic surveillance plan as a way of forestalling
terrorism by tapping into computer databases to collect
medical, travel, credit and financial records.
Worried about the reach of the program, Congress this year
prohibited what was called the Total Information Awareness
program from being used against Americans. Its name was
changed to the Terrorism Information Awareness program.
This month, the Senate agreed to block all spending on the
program. The House did not. Mr. Wyden said he hoped that
the new disclosure about the trading program would be the
death blow for Admiral Poindexter's plan.
The Pentagon did not provide details of the Policy Analysis
Market, like how much money participants would have had to
deposit in accounts to participate. Until today, trading
had been scheduled to begin on Oct. 1, with the number of
participants initially limited to 1,000 and possibly
expanding to 10,000 by Jan. 1.
"Involvement in this group prediction process should prove
engaging and may prove profitable," the market's Web site
The overview of the plan said the market was planning to
focus on the economic, civil and military futures of Egypt,
Jordan, Iran, Iraq, Israel, Saudi Arabia, Syria and Turkey
and the consequences of United States involvement with
those nations. The creators of the market envisioned other
trappings of existing markets like derivatives.
In a statement, Darpa said the trading idea was "currently
a small research program that faces a number of major
technical challenges and uncertainties."
"Chief among these," the agency said, "are: Can the market
survive and will people continue to participate when U.S.
authorities use it to prevent terrorist attacks? Can
futures markets be manipulated by adversaries?"
Mr. Dorgan and Mr. Wyden called for an immediate end to the
project and said they would use its existence to justify
cutting off financial support for the overall effort. In
the letter to Admiral Poindexter, they called the
initiative a "wasteful and absurd" use of tax dollars.
"The American people want the federal government to use its
resources enhancing our security, not gambling on it," the
The two lawmakers said the program needed to adhere to a
high standard because of the involvement of Admiral
Poindexter, who was convicted of lying to Congress about
weapons sales to Iran and illegal aid to Nicaraguan rebels.
His conviction was later reversed on the ground that he had
been given immunity for testimony in which he lied.
In their letter, the senators cited the example from the
Pentagon of a bioterror attack on Israel.
"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,"
The time has obviously come to send John Poindexter packing and to shut down the wacky espionage operation he runs at the Pentagon. The latest idea hatched by Mr. Poindexter's shop-an online futures trading market where speculators could bet on the probabilities of terrorist attacks, assassinations and coups-was canceled yesterday by embarrassed Pentagon officials. The next logical step is to fire Mr. Poindexter.
In testimony before Congress yesterday, Paul Wolfowitz, the deputy secretary of defense, disowned the futures project. The insensitivity of the idea boggles the mind. Quite apart from the tone-deafness of equating terrorist attacks with, say, corn futures, the plan would allow speculators-even terrorists-to profit from anonymous bets on future attacks. The project's theoretical underpinnings are equally absurd. Markets do not always operate perfectly in the larger world of stocks and bonds. The idea that they can reliably forecast the behavior of isolated terrorists is ridiculous.
The "Policy Analysis Market" would actually have opened for business on Oct. 1 had Senators Ron Wyden and Byron Dorgan not blown the whistle. Despite Mr. Wolfowitz's pledge to kill it, however, the problem of Mr. Poindexter remains. He is a man of dubious background and dubious ideas. A retired rear admiral, he served as Ronald Reagan's national security adviser and helped devise the plan to sell arms to Iran and illegally divert the proceeds to the rebels in Nicaragua. He was sentenced to six months in jail for lying to Congress, a conviction overturned on appeal. He resurfaced under the Bush administration at the Pentagon.
His first big brainstorm post-9/11 was a program known as Total Information Awareness, designed to identify potential terrorists by compiling a detailed electronic dossier on millions of Americans.
Congress agreed earlier this year to subject that program to strict oversight and prohibit it from being used against Americans. In light of the revelations about the latest Poindexter scheme, Congress obviously did not go far enough. It should close his operation for good. The Senate recently agreed to do just that, adding an amendment to a Defense Department appropriations bill that would terminate funds for the program. The House must now follow suit