Don Marti

Tue 19 Feb 2013 05:21:29 AM PST

The Hedge

(I wrote this story a while ago, but the news is catching up fast, so I'd better put it up now.)

"Look, Agent Bellamy, I appreciate you coming out, but it's three in the morning. Can we set up a time to discuss this tomorrow, and can your people check the house while I'm at the office?"

Jack Murphy was too tired to follow some involved technical discussion with the big Intellectual Property Enforcement agent, who sat in Murphy's old steam-bent office chair, briefcase at his feet. Murphy, quickly dressed in chinos and Stanford Law sweatshirt, sat in his new ergonomic chair at a gleaming glass and metal desk. The desk looked out of place in the much-remodeled Maryland house that Linda had found when Murphy accepted the appointment in DC.

"I'm afraid it won't wait, sir," Bellamy said. "Sorry for the unannounced visit, but as you're probably aware, our agency tracks the Free Markets closely."

"The Free Markets? That underground money web site?"

"Yes, basically. Although it's not really a site, just a system for communicating and trading. That's what makes it so hard to shut down."

"Well, all I know is that if you jailbreak your computer you can get on anonymously and buy drugs or guns or whatever."

"That's right. Let me show you an example." Bellamy pulled a plastic IPEA evidence bag out of his briefcase. Inside was a heavy semiautomatic pistol. It was raw machined steel without the usual blued finish, and a blank slide where the manufacturer's name and serial number would be. The plastic bag, oily on the inside, looked like it was lined with little rainbows. "You can't make steel parts like this on a 3D printer, but you can make parts for a plastic machine that will cut aluminum. Then you can use aluminum parts to make machines that can cut steel. People trade machines, parts and weapons every step of the way. This one's complete, and it works. It was on its way to an underground gunsmith who puts a nice finish on them."

Murphy could see the shiny steel reflected in both of the room's immaculate black windows. "It's like Adam Smith's pin factory."

"Yes. And this piece could have come from any combination of thousands of basement workshops. It's completely untraceable, and infringes a zillion patents. These things are a headache for us, but that's not why I'm here."

Murphy leaned over the desk, and Bellamy continued.

"There's also an online scene called the prediction markets. Oh, hold on, sorry." Bellamy spoke quietly into his jacket cuff. The agents who had arrived with Bellamy were still doing some kind of security sweep of the house. Murphy was glad that Linda was away, dropping Jack Jr. off at college. Security stuff always put her on edge.

"All right. Prediction markets," Bellamy said. "If I want to bet on a football game, I can buy a prediction, say 'Eagles win on Sunday.' If they win, after the game the prediction expires and I get a dollar."

"Sounds like just online gambling. They're just saying 'prediction' instead of 'bet.'" Murphy yawned and shook his head to try to clear it.

"Yes, it's like an ordinary bet in a lot of ways. If the Eagles lose, my prediction expires worthless. Just like losing a bet. But those predictions trade up and down, like stocks and bonds, right up until the end of the game."

"And they're untaxed and anonymous."

"Right. And there are other predictions I could make. I could buy a prediction on 'Jack Murphy dead before October 14th'." And if, for whatever reason, you're no longer with us that day, I make a dollar."

"So is that how the assassination market works? Someone just makes a bet that somebody else will be dead?"

"That's one side of the deal. That's the bet that the assassin makes. Someone else has to take the other side of the bet, and lose. If you want somebody dead, you just place a bet that they'll be alive. You lose your bet, but they get taken care of."

One of the agents who had come in with Bellamy was standing in the office door. His light blue gloves and shoe covers didn't go with his dark blue suit. He was holding Murphy's laptop computer, with Murphy's mobile phone and charger on top.

"We're going to need to check those in the van," Bellamy said. "We'll have them back in ten minutes."

Murphy nodded and the agent turned and left. Bellamy had introduced him but Murphy was too tired to remember the name.

"So the original client, or whatever you want to call him, makes a bet, and loses, and the assassin wins, and that's how the assassin gets paid. But you said a dollar. Nobody's going to murder someone for a dollar."

"Right. There has to be some volume in the market for it to be a significant risk. A lot of people have to be willing to buy those predictions of 'Jack Murphy alive.' and lose the money."

"So how is my stock doing?" Murphy knew that DC was still chattering about the news of his surprise appointment. The Secretary was an old colleague from think tank days, but nobody expected that the President would go along with bringing Murphy in. The President was too good a politician not to have his own person in every department's number two spot.

"That's why we're here. There's a lot of volume. A lot of outstanding predictions on you alive."

"They're predicting I'll be alive because they want me dead." Murphy finally yawned and got his hand over it.

Bellamy just continued. "Yes, that's right. The good news is that the administration has an independent fund for protecting appointees. Our agency can't know about it officially, of course. That fund buys the same 'dead' predictions that an assassin would. Makes it less profitable for the assassin. Basically, we play the market to lose. It's expensive, and it's not a hundred percent solution, but it's the best answer so far."

"What about just going after the people who want me dead?"

"Frankly, sir, that wouldn't scale. Between the senior citizens and the cat thing, our market model says that more than four hundred thousand people have some money on you. If you're alive next week, they make a little money. If you're dead, they're happy too."

Murphy was silent.

Bellamy said, "They don't really think of it as gambling. More like they're hedging their exposure to your continued existence."

Murphy looked up. One of the other agents, whose name Murphy didn't remember either, was standing in the doorway. "We're clear, sir. No cameras or devices left. Verified no other residents present. Charlie team is watching the egress. We're good to go."

"All right." Bellamy ripped open the evidence bag and pulled out the raw steel untraceable pistol. The room smelled of some kind of oil.

"What are you doing?" Murphy yelled. His voice went up in a squeak at the end. He grabbed for his desk phone and realized it was gone.

"Sorry, sir," said Bellamy. "But the money in that slush fund has to come from somewhere. Sometimes we play to win."