PAM

PAM: Policy Analysis Market (Aug 1, 2003) 

Just when one thinks that things can't get any stranger in Washington and this administration, we get PAM .... 

The New York Times published an article titled "Pentagon Prepares a Futures Market on Terror Attacks" on July 29 about PAM (Policy Analysis Market), a venture where "investors" would be able to set up and trade in futures based on world events like assassinations, falls of governments, and such. Although bizarre, it's somehow typical of the American view that one can make money on just about anything. 

July 29, 2003

Pentagon Prepares a Futures Market on Terror Attacks

By CARL HULSE

WASHINGTON, July 28 — The Pentagon office that proposed spying electronically on Americans to monitor potential terrorists has a new experiment. It is an online futures trading market, disclosed today by critics, in which anonymous speculators would bet on forecasting terrorist attacks, assassinations and coups.

Traders bullish on a biological attack on Israel or bearish on the chances of a North Korean missile strike would have 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 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.

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.

The Pentagon, in 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."

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.

The initiative, called the Policy Analysis Market, is to begin registering up to 1,000 traders on Friday. It is 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 program like how much money participants would have to deposit in accounts. Trading is 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 Web site said.

The overview of the plan said the market would 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 envision 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 letter said.

             Copyright 2003 The New York Times Company

Even better, this venture was funded and supported by DARPA (Defense Advanced Research Projects Agency). The article reported that retired Admiral John M. Poindexter's fingerprint are all over this project. Poindexter, of course, also recently brought us TIA (Total Information Awareness), which aimed to keep massive computer databases on the habits and practices of American citizens. After the justfied outcry by media, citizens and even Congress about invading the privacy of America's citizens, the name of TIA was changed to Terrorist Information Awareness. Whether the concept also changed might be open to question, even if the words (Mission Statement, etc.) changed. Of course, putting "Terrorist" in the name was a brilliant marketing ploy to exploit the patriotic knee-jerk terms like "terrorist", "patriot", and "American flag". 

Congressmen were suitably and properly outraged. Not only was this a totally repugnant scheme, but even worse, they hadn't even known about it. PAM was just about as good for them as child pornography, something every congressman can fulminate about without fear of contrary opinions. Not only Democrats, but even Republicans, blasted the program. 

On the very same day as the July 27 article, it was abruptly canceled. The web site, no doubt visited frequently that morning, also disappeared by the afternoon. Fortunately, I was able to save and restore most of one of the pages (only the header and logo is missing) from a Google cache; in the interest of preserving an evanescent piece of American, here is the PAM Concept Overview page. Unfortunately, none of the links work any more. 

Then today, Aug. 1, we read that John Poindexter will be resigning from DARPA. Widely known for being imaginative, clever, and thinking outside the box, he was also apparently politically tone-deaf. His troubles began with Iran-Contra, where as a national security advisor to President Reagan, he engineered the financial support of the Contra rebels from arms sales to Iran, secretly of course. Convicted of lying to Congress, he escaped punishment through immunity for his testimony. 

What better place then for Poindexter than DARPA, what better program to lead after Sept. 11, 2000, than TIA (then Total Information Awareness). Congress, still remembering Poindexter's lies during Iran-Contra testimony before them, and spurred by a civil rights outcry, put a clamp on this "Big Brother" scheme. Hence the change to Terrorist Information Awareness. 

There is of course a web site for TIA at Information Awareness Office. Clicking on "Programs" gets one to the TIA page, or TIA Systems, And just in case this site also gets modified or disappears, I've saved the TIA Program Flow Chart as another piece of Americana: 

It's straight from a demented High-Tech program presentation, by way of the Dilbert comic strip. Another delightful piece of reading is the IAO Mission Statement. It has the look, smell and feel of battalions of wordsmiths in countless hours at endless meetings furiously forging away at a significant, all-encapturing, meaningful statement, to come up with:

IAO Mission  

The DARPA Information Awareness Office (IAO) will imagine, develop, apply, integrate, demonstrate, and transition information technologies, components, and prototype closed-loop information systems that will counter asymmetric threats by achieving total information awareness that is useful for preemption, national security warning, and national security decision making.

We can all feel safer now, can't we? 

Updated 8/12/03