John Poindexter, the Pentagon division chief behind the notorious Total Information Awareness mega-database, is at it again. Now, he's heading up an effort to build a kind of stock market for terrorist strikes.

The New York Times reports, "traders bullish on a biological attack on Israel or bearish on the chances of a North Korean missile strike would have the opportunity to bet on the likelihood of such events on a new Internet site" established by the Defense Advanced Research Projects Agency's (DARPA) Information Awareness Office.

According to the Associated Press, the Pentagon has requested $3 million for the Policy Analysis Market for next year and $5 million for the year after.

THERE'S MORE: "It sounds jaw-droppingly callous, not to mention absurd," notes the San Francisco Chronicle. "But experts say the DARPA-backed Policy Analysis Market is based on a legitimate theory, the Efficient Market Hypothesis, that has a proven track record in predicting outcomes."

Basically, the idea is that the collective consciousness is smarter than any single person. By forcing people to put their money where their mouth is, the wagers help weed out know-nothings and give more weight to the opinions of those in the know.

"Markets are a great way of aggregating information that a lot of different people have," said Eric Zitzewitz, an assistant professor of economics at the Stanford Graduate School of Business. "One of the big issues with intelligence that was gathered before 9/11 was that information wasn't aggregated within the intelligence community. This is directly aimed at addressing that."

Instapundit has more on this.

AND MORE: The Associated Press now says that the Pentagon will "abandon" the Policy Analysis Market (PAM). Sen. John Warner, the chairman of the Senate Armed Services Committee, spoke with the program's director, "and we mutually agreed that this thing should be stopped," the AP reports.

AND MORE: The cancelled terror market project wasn't the Pentagon's only experiment in trading floors that gauge the likelihood of world events. Two small firms -- Market Technologies Systems (the professors behind the famed Iowa Electronic Markets election exchange) and Neoteric Technologies -- received grants from DARPA to build such operations. Two of their trading floors are up on the web, currently: One market speculates in homeland security threat levels; the other in the spread of SARS.