From Slate:
"Just a day after two Democratic senators reported the existence of the Policy Analysis Market, the Pentagon pulled the plug on it. The PAM was intended to be a kind of turmoil exchange. Investors would place bets on events in the Middle East occurring by a certain time—say, a biochemical attack on Israel before June 2004—and collect real money if they happened."
The only predictive power markets have by themselves (if any at all) is that of self fulfilling prophecy. Imagine "investors" on PAM trying to "influence" events they have bet on by subtle persuasion of campaign cotributions and old boys networks (a'la "reconstruction" of Iraq). Absolutely scary!
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