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11/17/2003 Archived Entry: "Bad ideas never die."
Bad ideas never die.
They just get tweaked a little and brought back.
A U.S. government plan to create a market allowing traders to bet on the likelihood of terror attacks and other events in the Middle East has been revived by the private firm that helped develop it. The market, called the Policy Analysis Market (PAM), will allow traders to buy and sell contracts on political and economic events in the Middle East, including assassinations, the overthrow of regimes and terrorist attacks. The market is scheduled to start trading next spring.
It originally was developed and funded with the assistance of the Defense Department, where officials cited the uncanny ability of other futures markets to predict election results, weather patterns and other complex events.
Note to visiting conservatives: I'll note that this is not being done by the government. Still think it's a damned stupid idea, though.
Replies: 18 people speak up
What's it got to do with "visiting conservatives"? I think even most of us think it's a pretty stupid idea.
Posted by Geoffrey @ 11/17/2003 09:18 PM NY
wow, it must be a REALLY bad idea if this douche nozzle agrees, either that or our evil liberal ideas are getting to him, what next, maybe he will agree that blacks and women should be allowed to vote after all, or maybe that slavery should be abolished. be carefull, these dangerous ideas could spread through your close minded ideology like a wildfire, burning away your ignorance. nah probobly not, more likely its just such a bad idea that a tree stump could see it. not to mention the fact that there is a potential for terrorists to make a lot of money by investing, and then commiting the acts themselves for profit. it brings a whole new dimension to insider trading
Posted by justin @ 11/17/2003 09:51 PM NY
How ironic this is. Mensa Boy is crying about what a horrible person I am and should leave this page, buy he can't post on topic without flapping his cockhole about me.
Dude, I'm sorry your wife slipped me her number. I swear I never called it.
Posted by Geoffrey @ 11/17/2003 09:58 PM NY
hey douche nozlle,when i think about you i touch myself.
Posted by justin' @ 11/17/2003 09:59 PM NY
"...officials cited the uncanny ability of other futures markets to predict election results, weather patterns and other complex events."
There's a wee bit of a problem with that premise. Futures and forwards markets predict nothing. In a market for futures contracts, two counterparties make opposite assumptions about the future value of some underlying security or commodity. It's a zero-sum game: one guy wins X dollars, the other guy loses X dollars (plus/minus transaction fees). In short, futures markets are neutral exchanges for counterparties to offset risks or to speculate.
This is the kind of useless crap I learned when I busted my ass for six years at night getting my equally useless MBA.
Posted by Metropolitan99 @ 11/17/2003 10:19 PM NY
still seems like a good way to make a shit ton of money if you are a terrorist, and it could all be done through variouse fronts (like charities, or just sympathetic buisinessmen) it wouldnt even have to be connected to the people committing the act. i know that terrorist organizations currently sell certain stocks short before they strike, to finance their operations, this seems like just throwing money at them. it seems like fighting a drug war by giving the cartels a commission based on performance. (heres to getting back on topic, maybe if we ignore them, they will go away)
Posted by justin @ 11/17/2003 10:36 PM NY
Mensa Boy, want me to stop putting it to your dog faced Mrs, so you don't have to touch yourself anymore?
Metropolitan, that was why they thought it would work.
Posted by Geoffrey @ 11/17/2003 11:22 PM NY
Geoffrey,
You and I are rival oil refineries. I think the price of Saudi sweet crude #1 will rise over the next three months. You think it will fall. Tomorrow I buy a 90-day futures contract for Saudi sweet, you are my counterparty, therefore, you sell the contract to me. All this takes place with the futures exchange as the clearinghouse. Over the course of the next three months the price of the underlying commodity (in this case, Saudi sweet) fluctuates. There will be daily mark-to-market adjustments paid by either of us to limit our exposure. At the end of 90 days, one of us will make a profit, the other a loss.
How does this provide the government TODAY with an insight into the price of crude oil TOMORROW? You can substitute anything you like in place of crude oil.
What non-financial types tend not to realize is that organized financial markets (plain vanilla or derivatives) are nothing more than sophisticated gambling casinos). Sure, they use a lot of impressive, esoteric statistical models, but in the end it's all a crap shoot.
I hope to god that our government is not going to rely on futures markets to determine policies. Hell, why not use astrology, sun spots, tea leaves, the ouija board? Hey, do they still make those "Magic 8 Balls"?
Posted by Metropolitan99 @ 11/18/2003 12:36 AM NY
Metropolitan,
Either you didn't read the article, or I don't understand. Admittedly, I know little about what takes place in the financial district. I did see a show where they were discussing PAM, though.
The way it was explained made sense. They run a terrorist futures market. You put up money, banking on a terrorist event will happen in the period you chose. What they assumed was people with inside information would bet days they knew something was going to happen. This would allow us to predict when attacks would take place.
They scrapped this idea for a variety of obvious reasons, one of which was a fear that it would induce terrorist acts as a means to raise money.
Posted by Geoffrey @ 11/18/2003 01:33 AM NY
well, it might be more accurate than just guessing, but i think thats about as far as it goes, statistically it would take out human error (well distribute it among many humans) it seems kind of like letting the machine pick your lottery numbers, because a completely random selection is statisticly slightly better. either way, i dont know of any historical precedents for the use of a magic 8 ball (although i bet bush has gone through quite a few 8 balls of the white powdery sort). on the other hand, both hitler and ronald reagan based a lot of their policy decisions on astrology, you can judge for yourselves how well that worked out
Posted by justin @ 11/18/2003 11:25 AM NY
Geoffrey,
I admit that I didn't read the PAM article. To end this dicussion, I would caution against believing that financial markets can predict future events with any consistency. Remember the Internet bubble? The best financial minds and institutions in this country didn't see the approaching train wreck (1st quarter 2000). I took a bath on Cisco and Microsoft.
On the other hand, if George Soros started betting against a country's currency, the smart money would go short. Soros' ability to read macro trends is uncanny (the Malaysians are still pissed at him for selling the ringgit short back in 97/98). But even he makes mistakes on occasion.
Posted by Metropolitan99 @ 11/18/2003 12:25 PM NY
If it is used as intended, to predict terrorist attacks, assasinations, etc, it may work. Again, only time would tell. The difference between PAM and the scenario you are playing out is the human aspect.
Assasinations and terrorist acts are controlled by humans from conception to action. There are people that know, beyond a shadow of a doubt, which days to put their money on.
Again, I think if you read the article, you'd see that your comparison really doesn't apply here.
Posted by Geoffrey @ 11/18/2003 01:10 PM NY
Fair enough.
Posted by Metropolitan99 @ 11/18/2003 02:03 PM NY
isnt that nice, this thread started and ended with agreement. cant we all just get along?
Posted by justin @ 11/18/2003 02:20 PM NY
Sure Justin, as long as we ignore you.
Posted by Geoffrey @ 11/18/2003 03:15 PM NY
good, you ignore me, ill ignore you. actually if everyone would just ignore these twats they would probobly just go away eventually. on the other hand i cant resist a good argument.
Posted by justin @ 11/18/2003 03:31 PM NY
wow, it must be a REALLY bad idea if this douche nozzle agrees, either that or our evil liberal ideas are getting to him, what next, maybe he will agree that blacks and women should be allowed to vote after all, or maybe that slavery should be abolished. be carefull, these dangerous ideas could spread through your close minded ideology like a wildfire, burning away your ignorance. nah probobly not, more likely its just such a bad idea that a tree stump could see it. not to mention the fact that there is a potential for terrorists to make a lot of money by investing, and then commiting the acts themselves for profit. it brings a whole new dimension to insider trading
Yeah, good argument.
Posted by Geoffrey @ 11/18/2003 03:54 PM NY
thanks, i think so too
Posted by justin @ 11/18/2003 04:52 PM NY
