Sunday, 6 September 2009

Investment bankers just keep rolling along.

Is greed a christian value?  It would seem that there are people in this world, call them capitalist if you will, who are never ever satisfied with a modest return on their investments.

No, they clamour for the El Dorado of profits, the golden goose that will keep on laying eggs until there are no schmucks or rubes left to con, eager to buy into the bottom of the investors’ pyramid.

So it should come as no surprise after the collapse of the sub-prime mortgages market, Wall Street has moved on to the next big thing.  No matter that some ‘financial advisors’ have been busted for shilling this ‘financial product’ for unethical and possibly criminal misconduct.

“The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.

The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated. …

Critics of life settlements believe “this defeats the idea of what life insurance is supposed to be,” said Steven Weisbart, senior vice president and chief economist for the Insurance Information Institute, a trade group. “It’s not an investment product, a gambling product.”

Undeterred, Wall Street is racing ahead for a simple reason: With $26 trillion of life insurance policies in force in the United States, the market could be huge.”

Back in the 1980’s many gay professional men who suffered from HIV/AIDS turned to financial operatives running similar schemes, who lent them money at high interests rates AND required that the policies be turned over to them as beneficiaries.

Greed.  Plus ça change, plus c’est la même chose.  It's all fun and games and profit until hundreds of people get bankrupted.  Oh, and the market crashes. 

Furthermore ... Cathie from Canada makes a laconic comment about how Wall Street might strategically adopt Palin's "Death Panels".

No comments:

Post a Comment