I DID shorten the explanation a bit TOO much, didn't I?

In commodities, like you mentioned, the more an investor knows about his
market, the more LIKELY he is to make money.  However, since most commodity
traders already know PRETTY MUCH all there is to know about their respective
markets (except for the guys known as "suckers"<GRIN>) Profitability comes
down to 'dumb luck'.  Somewhat like a high stakes poker game.  All players
being evenly matched, luck is the determining factor, though an inexperience
player can occasionally do well, it won't happen for long).  Commodities
being a zero-sum game means every dollar one investor makes has to be 'lost'
by other investors.  The $60,000 the Chicago girl earned was lost one or
more people who'd bet the other way.

The Arms Race reference means if YOU get better (or more knowledgeable, in
this case) your competitor soon follows, canceling your advantage.

In options, no, the house does not set the odds.  The house has NO control
over the odds.  So in this 'terror options' scheme, the where the investors
can actually effect the outcome, it becomes like the PLAYERS (or managers,
like Pete Rose) in baseball betting for or against themselves in their
games.  First, they have inside information.  Second, they can gage their
performance in order to be more profitable.   Third, the DARPA plan was to
bet on death, destruction, and chaos, not a game where the losers only go
home poorer or dejected.

Participants and investors in these "terror futures" would be profiting from
the suffering and death of innocent people.


-----Original Message-----
From: Mark Wonsil [mailto:[log in to unmask]]
Sent: Friday, August 01, 2003 12:54 PM
To: 'Gates, Scott'; [log in to unmask]
Subject: RE: [HP3000-L] OT: War Futures (Back to OT)


HP-3000 Systems Discussion wrote:
> Commodity futures, such as you mentioned at the end of your note, are
> a zero sum game. Therefore the knowledge to be consistently successful
> grows constantly (Kind of like an arms race does with weaponry).

Sorry, I don't follow the arms race thread.

> The futures market for 'terror' developed by DARPA would eventually,
> IMHO, lure the terrorists to invest (and back up with
> action) in order to fund their plans or a hedge fund for their
> failures.

Again, I don't follow.  In any betting scheme, the "house" sets odds so the
money is evenly split on either outcome.  In order for a terrorist to make
the big money, you have to guess what others are not.  Of course, there are
those who will bet on the long shot - witness any purchaser of a multi-State
lottery ticket.  They are the "noise".  If there's an increase in the
betting, and the target event is well-defined, then the information is out
there to start to prevent the act.  This is the signal.  If terrorists bet
on the event to happen to generate a false information and don't carry it
out or fail at doing it, well, they lose all of the money in the bet.  If a
terrorist bets against an unlikely event, tries and fails, then they won't
earn that much money.  What the DARPA folks are hoping is that the smaller
fish, someone resentful of the leadership, will show the cards by placing
bets.  It really seems like a pretty good way to get people to fess up.
Contrast this to listening to the talking-heads (analysts, not the group) on
TV or in the papers, who's free opinions are usually overcharged.

From an economic standpoint, it's pretty clever.  It may sound gruesome, but
like the article says, it's really no different than a term life policy
purchased by individuals and companies all around the world every single
day.

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