You can almost understand the logic behind DARPA's Policy Analysis Market. Almost–if, say, you've been hanging out with hedge fund managers all night and snorting immense quantities of cocaine.

The man allegedly behind the scheme, former Admiral John Poindexter, is a man who is all too bright in all the wrong ways. He's used the “free market” to handle other policy issues before–like selling weapons and military parts to Iran to fund a secret war in Nicaragua. But PAM was a marvel of subtletey: have people unknown bet on the occurrence of events that people unknown might cause, and give the US “insight” into the likelihood of those events.

Or, in other words, set up “futures” for things that the US government doesn't want to dirty its hands with, and create a way to make funding assasination and terror a growth industry on par with the Internet bubble. Or, even unintentionally fund those who would act in ways counter to the interests of the US. Here's two for-instances, based on examples of futures given by DARPA:

North Korea's “secret” funding apparatus buys futures in PAM for a missile attack by North Korea on…anything. Then, suddenly, North Korea launches a surface-to-surface missile. North Korea collects on the futures bet. North Korea's money men collect, and use the money to fund more missile development. Or maybe North Korea shorts futures on a missile attack…

Or:

Futures on the assasination of Yasser Arafat are bought up by an Israeli hedge fund. Then, a new faction of the PLO springs up, and assasinates Arafat. Similar futures are bought on the assassination of leaders of Hamas and other Palestinian political/resistance/terror groups. Amazingly, all these bets pay off. Hmmm.

But John Poindexter quit yesterday (according to the Wall Street Journal, page A2), after the Pentagon cancelled the PAM project(just like they did with his Total Information Awareness project), and even the most conservative analysts called for his head. So now, he'll have to go work for some think tank and get paid private sector wages to come up with these brilliantly cockamamie ideas.