Tip-Off

As a follow-up to my previous post, let's think about the implications of some well-connected private citizens receiving advance warning of a terrorist attack. The Daily News piece reported the following:

The NYPD confirmed that it learned of the E-mails on Oct. 3 - three days before Mayor Bloomberg, Police Commissioner Raymond Kelly and the FBI went public with the threat.

And this:

One of the E-mails was dated Oct. 3 with a 6:05 p.m. time stamp, about 90 minutes before Bloomberg was fully briefed on the threat, a police source said.

So it appears that by the evening of October 3, it was common knowledge among a select group of private citizens that the government feared a major terrorist attack would occur over the next few days.

The next day, October 4, the Dow Jones fell 0.9%, the S&P fell 1%, and the Nasdaq fell 0.8%. Mayor Bloomberg went public with the threat on October 6. From the close of trading on October 3 through October 6, the Dow declined by 2.4%, the S&P by 2.9%, and the Nasdaq by 3.3%.

After 9/11, I had no doubt that advance knowledge of the attacks allowed some to reap blood profits via the stock market. This was abundantly clear from both the broad market action and the trading activity in some specific stocks and options. Of course, we later learned that the entire intelligence community's "hair was on fire" during the summer of 2001.

Hypothetical issue to debate: The White House receives a credible warning that a suitcase nuclear device is secreted in a U.S. city and set to detonate within 24 hours. Based on the new story in the Daily News and what we know post-9/11 and post-Katrina about this administration's approach to dealing with a potential or actual catastrophe, do you think "the public" would be warned first---or at all? Remember what really worried Walter Matthau's character in the movie Fail-Safe when it appeared New York was about to be destroyed? Hint: it wasn't the people.