Friday was to have been the beginning of sign-up for a “terror stock market” proposed by the Pentagon, a proposal discarded just as soon as it was announced this week. Iowa State University Extension Market News Director Doug Cooper puts together market reports daily on commodities and the economy, and can’t imagine what they expected. His reaction, after he stopped laughing and realized they were serious, was that it wasn’t funny, and it wouldn’t work. Cooper says the plan wasn’t put together by economists, but by people who work in military strategy — a completely different field. He wonders if they thought maybe terrorists would trade heavily in the market on a day they thought something was going to happen. The market analyst says it would only work as a predictor of events if terrorists ran all the markets. Cooper cites a saying of economists that “the markets are always right.” And in fact they are, he says, because the market, with some fluctuations, will always eventually correct. The Policy Analysis Market would have been run on the Internet, overseen by the Pentagon, and trading was due to begin on October 1st. He sees the whole thing as “something that people in a room that’s been dark too long thought up.” Creighton University economist Ernie Goss puts out a monthly report for which he gathers data in hopes of making accurate predictions — and he says the “terrorism futures market” doesn’t have potential to predict danger. He says if there was a high threat shown in that futures market and the government moved to thwart the attempt, that would ruin its ability to predict, since it would prevent the market from working. Goss says when you first hear about it, it seems wacky…but when you look at the details, it seems “even wackier.” He calls the plan “almost surrealistic,” to propose that someone could gain economically from events like 9/11 and he says that just wouldn’t go over with the American people. Goss puts out the monthly economic report and outlook for nine midwestern states including Iowa, based on surveys of purchasing managers.
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