Betting On Terror Why futures markets in terror and assassinations are a good idea. Libertarian magazine Reason argues that last summer's Pentagon proposal to create a futures market aimed at predicting events in the Middle East was a good idea, despite the political uproar it caused.

To illustrate how PAM might work, Senator Wyden offered a scenario in which a bidder thinks early on that Prime Minister X is going to be assassinated. So she buys 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," noted Wyden. "So if it comes to pass, those who bought at 5 cents make 95 cents. Those who bought at 50 cents make 50 cents." Of course, those who bet the other way, lose their money. What Wyden is ignoring is that while market participants are making and losing money, it's possible that our intelligence agencies have gained some valuable information to help our leaders formulate appropriate policies such as what to do if Prime Minister X is assassinated.

So why not harness the predictive power of markets for intelligence purposes? Markets have demonstrated time and time again that people have a lot of dispersed and hidden information that the prospect of profit can lure into the open.