Almost as soon as the Pentagon's "terror market" idea started causing hissy fits, contrarian pieces began appearing saying that the idea wasn't nearly as awful as it sounded. A piece in The New York Times -- no friend to the Bush administration, at least not on its editorial page -- called it "a good idea with bad press." Most of the pieces I read stated the obvious: that markets are better predictors of events than any single expert. Maybe, but...

The best and most balanced piece I saw was yesterday's cover piece on Slate. Daniel Gross, the magazine's business and finance writer, was overall bullish on the project, but suggested some potential drawbacks. To begin with, "a havoc market wouldn't benefit from the rationality that regular financial markets require" because "in the Middle East, many of the figures ... are not what international relations types refer to as 'rational actors.'" So what? I don't buy this argument at all, because I don't think most human beings are rational actors, either. Just because you're not rational doesn't mean you're not predictable.

There's another huge drawback, though. Once you get over the "gee whiz" aspect of the idea, you start to realize the whole thing is sort of self-defeating. For instance, if the Pentagon saw "that people were betting heavily on the assassination of Iraq's interim president, the Defense Department would start searching for some assassination plot in the hopes of rooting it out. But preventing the assassination would cause all the people who bet on it to lose their money." The Pentagon, see, is not trying to make money off future events; nor, one would hope, is their ultimate goal to facilitate others in making money. Instead, the Pentagon's business is trying to influence future events -- the very events that people on the market are betting on. So the most successful the market is, the less successful the market is, and vice versa. (The Slate piece ended on an overall positive note for such a market's potential, but it never really answered its own counter-argument.)

Also fun was the related piece that pointed to places on the Internet where you can already buy and sell weird futures. On Long Bets, you can bet on where -- not whether -- we'll first discover extraterrestrial life.

Meanwhile, Josh Marshall reveals his ignorance of financial markets on Talking Points Memo by asking, mockingly, "Will there be derivatives?" A future is a derivative, ya goof.