The Pentagon's online "terror" futures market may have gone down in flames, but questions surrounding 9/11 insider trading and market rigging before the Iraq invasion still linger.

In a much-aligned plan the Pentagon described as "engaging and ... profitable," anonymous traders were invited to bet on the likelihood of Middle Eastern death and destruction; public outcry forced the "Policy Analysis Market" (PAM) plan to be yanked days before its scheduled launch.

But allegations about the ultimate "terror" futures market, 9/11 insider trading, have yet to be adequately addressed. It's known that just weeks before the attacks, speculative trading surged on companies to be hardest hit, such as those located in the World Trade Center. There was a rally in five-year US Treasury notes, the best investment in times of US crisis, and sales of airline-based put options (bets a stock's price will fall) increased sharply too; interestingly, many such put options were sold through a firm previously managed by top CIA director, A.B. "Buzzy" Krongard.

Estimates of 9/11 profit-taking are in the billions of dollars, and according to Dylan Ratigan of Bloomberg Business News, "This could very well be insider trading at the worst, most horrific, most evil use you've ever seen in your entire life. This would be one of the most extraordinary coincidences in the history of mankind if it was a coincidence."

Bowing to public pressure, the FBI and other federal watchdogs promised swift and thorough investigations into potential 9/11 insider trading. Significant that today, almost two years after the attacks, no progress seems to have been made.

It's also indicative that the US government didn't take market volatility preceding 9/11 more seriously, especially since the rationale behind its recent PAM terror-trading scheme was that the "extremely efficient" predictive quality of futures markets could enhance national security.

But some analysts charge the Bush administration has actually been too active in the markets, effectively manipulating levels to build up public support before its invasion of Iraq. Here's how analysts say it worked: a secretive US governmental committee orchestrated massive selling in the euro, crude and gold right before the invasion, effectively lowering prices and bumping up the dollar. The covert committee simultaneously purchased targeted Dow Jones equities to prop up the relatively unsophisticated index, thereby creating a rally big enough to calm investors. How else, analysts say, to explain the market rally when it seemed an invasion would be postponed, followed by a rally one week later at news war was imminent?

The fact that a team of US governmental and Wall Street leaders periodically moves the markets in US interests is undisputed; the group was created by Executive Order 12631 in the Reagan years and continues today under the nickname Plunge Protection Team.

What is less clear, however, is if the Bush administration's desired invasion of Iraq was deemed a US interest vital enough to rig the markets.

The Pentagon's dubious futures-market scheme may have been axed, but far too many questions surrounding the link between US stock markets, war and terrorism remain.

Heather Wokusch is a free-lance writer. She can be contacted via her web site: www.heatherwokusch.com

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