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Wall Street's New Halloween Trick
The very same greed-fueled bankers who brought us the disaster of 2008's financial crash have created another exotic financial horror to replace their securitized subprime-mortgage packages that exploded all over us.
Wall Street wizards have been down in their corporate basements working furtively to fabricate some new, get-rich-quick financial gimmick, and — Holy Frankenstein! — they've done it.
It's a scheme based on the mundane (but huge) life insurance market. Wall Street intends to tap into the $26 trillion-worth of life insurance policies that Americans hold, using a financial mechanism called "life settlements."
Often, the ill and elderly need cash for assisted living or myriad other reasons, and a small network of insurance brokers exists to offer them a sizeable pile of money in exchange for being named the beneficiary of the policy. A broker might pay $400,000 for a million-dollar policy.
Wall Streeters intend to turn these life settlements into a big boon for investment banks and super-rich speculators. First, they will take over the broker side of the business, setting up extensive networks of heavily advertised, life-settlement agencies across the country to entice sick and old folks into settlements. You can imagine the come-ons: "Free Cash!" "Cash-in BEFORE You Die!" "You CAN Cheat Death!"
Next, Wall Street banks will "securitize" these settlements — i.e., they will package thousands of them into bonds that they'll then sell (for hefty fees) to big investors around the globe. As a result, when Uncle Bob croaks in Dubuque, some speculator in Dubai will collect Bob's life insurance payout.
Drooling bankers anticipate a $500 billion market for this hustle. Even as Washington discusses ways to regulate Wall Street's earlier frenzied securitization lunacy, the giant banks are working themselves into this next frenzy.
As one giddily exclaimed, "We're hoping to get a herd stampeding."
The New York Times reports that Credit Suisse is already shouting yippy-ti-yi-yo, "building a financial assembly line to buy large numbers of life insurance policies, package and resell them — just as Wall Street did with subprime securities." Similarly, reports the Times, "Goldman Sachs has developed a tradable index of life settlements, enabling investors to bet on whether people will live longer than expected or die sooner than planned."
While this game of grave-robbing for fun and profit is exhilarating for the investing elite, it will be a downer for life insurance customers, for it means that the price of policies will go up. This is because insurance companies base their price on the actuarial calculation that numerous policyholders will pay premiums for years, but then cancel their policies before they die (due to personal financial reasons, family breakups, etc.). In these cases, the insurers collect a wealth of premiums without having to pay out a dime.
But this calculation is to be wrecked by Wall Street's intrusion into the once-straightforward relationship between insurer and insured. Now, some faraway, third-party investor will own the policy, keeping it in force until the former policyholder dies. Thus, the company will make more payouts than it figured to, compelling them to recalculate their balance sheets — and jack up life insurance prices.
Once again, Wall Street is turning a pedestrian consumer product into a global casino game. Consumers lose, while speculators gain from exploiting other people's hardships, eventually reaping profits from their deaths.
Why should we go along with this real-life Halloween horror? As suggested by Forbes magazine columnist Michael Maiello, Congress could and should implement a simple reform stating that there's no payout on any life insurance policy that is "transferred into an investable security."
This would still allow life settlements for the relatively few people who actually need them — but it would drive a stake in the cold hearts of Wall Street profiteers. What a happy Halloween that would be!
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30 Comments so far
Show Alldumddown old fart
I purchased $25,000 of World Series Swaps (WSS) for the Colorado Rockies to win the series from my local bookie,er, bank. Another service from the financial industry.
"Congress could and should implement a simple reform stating that there's no payout on any life insurance policy that is "transferred into an investable security."
I'm not holding my breath for Congress to develop a sense of ethics or concern for the future of the very citizens it is suppose to be representing.
"What has happened to America, the destruction of what was recently the most powerful economy in the world could not have happened without the complicity of politicians of both parties who aided the bankers in their parasitic plundering of America’s wealth, productivity and future."
Regulators should allow life insurance to be sold in two different markets with different price structures. The first market would not allow the policy to be sold and securitized. The second market would allow the policies to be sold and securitized. The customer would then have a choice, if they felt that down the road the option of immediate cash was more important to them they could by policies from the second market at the appropriate markup. Bottom line the issue needs to be dealt with immediately by the regulators.
How about this:
The banks actually loan money to people who will put up their life insurance policies as collateral!
Didn't the taxpayers bailout these pigs so they allegedly could lend again?
What in the world would lead you to believe that? What, do you actually listen to the media? :-)
I just had a great idea! I was reading "Symptoms of the Occupation" by Bill C. Davis elsewhere on this site when it suddenly hit me: I could make a fortune buying the rights to the gold in dying people's teeth (any persons, really). They could use the money to pay for the live extending treatments forced upon them. Actually, this idea can be extended to their hair, livers, etc. I could then securitize these investments in "gold futures" and "liver futures", or are they "future gold" and "future livers"? I think I have stumbled upon a sort of financial final solution!
a little rat poison in the drinking water and the mortality rate among the elderly could be "managed" to increase profitability as well
then there's always single car accidents, small plane crashes or that old standby random street homicide by persons unknown
let's face it at their age you don't have to shove anyone - a little push will do
I first read about this on New Deal 2.0's website, which is great for different views on economic, financial, and monetary policies (I comment on there too, and the authors politely reply). Michael Moore's movie also talks about this I think. How many examples do we need that this kind of profit over everything else capitalism has no place in a democratic society?
I guess this is the rise of the *real* death panels...
How far behind can *this* kind of thing be:
http://www.youtube.com/watch?v=4WUUnc1M0TA&feature=PlayList&p=BAFEAF9F0A75EF23&playnext=1&playnext_from=PL&index=42
Walk in peace.
Wall Street's New Halloween Trick
This October 31st they'll come dressed up as diseased whores.
What's the difference between a whore and these banksters?
The whore stops screwing you when you're dead.
Actually, prostitution is a honorable occupation compared to bankster parasites.
It's just capitalism as usual. They're always devising new schemes for fleecing the gullible, brainwashed public. Obama has bent over backwards and twisted himself into a pretzel to accomodate every Wall Street huckster and con-man that crosses his path, and this is just one consequence of his complicity with these thieves. Strap in and prepare for more of the same, because it won't end until we end capitalism.
Wall Streetwalkers, that is. They walk like a real Death Panel, to me.
Just wait for the Kool-Aid. (What do you think they really put in H1N1 vaccine?)
HEY DUH, This "death futures" thing has been growing quietly at the margins of the financial community for over a DECADE it is nothing new at all.
Somehow it has been "discovered" and now it is "news"?
This is all spin and distraction, the truth is the guts have fallen out of the market long ago.
Long gone are the days of easy pickins. it's over. you are all grasping at straws and the real scumbags are digging in and picking up their winnings and bracing themselves for the next big hit.
Who cares about these punk ass "instruments"? I want heads on stakes.
Soon come the time of the assassins.
>>Who cares about these punk ass "instruments"? I want heads on stakes.<<
I prefer piano wire and lamp posts.
Violence is not the answer.
"When I despair, I remember that all through history, the way of truth and love have always won. There have been tyrants and murderers, and for a time they can seem invincible, but in the end, they always fall.. think if it... always."
--- Mahatma Ghandi
It would be more fun to watch them all go to jail for the rest of their lives. In one of their prisons for profit.
I fully agree.
Enough.
All decent people (most decent people are Liberals) need to get informed and combined with decency, the result has to be ANGER.
If I were a politician, I would NOT be diplomatic; I would not worry about "stepping on toes"; I WOULD be very outraged and angry and I would be making a LOT of speeches, telling people, teaching people, of the terrible, horrid facts that the Right-Wingers are doing and how they are destroying America.
Read the Oct. 2 CommonDreams.com article by David Michael Green "If the Russians Did This to Us, We’d Kill ‘Em".
That is the best article that I have read regarding the damage these criminal Right-Wingers are doing to America.
Anyone who doesn't get really, really angry upon reading that is either brain dead or rotten.
As the Satchmo would say in encore, "Oh what wonderful world it would be." Of course, Sam Cooke had a similar line in another song. They were so talented. Damn I'm glad that even though I look all white like a lot of Anglo Saxons and also like others of my European tribe my dad, my biological one was black.
AD
As the Satchmo would say in encore, "Oh what wonderful world it would be." Of course, Sam Cooke had a similar line in another song. They were so talented. Damn I'm glad that even though I look all white like a lot of Anglo Saxons and also like others of my European tribe my dad, my biological one was black.
AD
Poor puppies, it's all about knowing one's place. You are chattel, to be used for the benefit of those in my place, i.e., the masters of the universe.
Smedley Ambler III of Covington Downs
The "chattel" need to kick these "masters of the universe" all the way to the farthest, coldest part of the universe.
Kick their butts into a black hole.
George C. Brown - A whole passel of interesting comments, but where are the cries for the re-establishment of some of the "old" regulations that Reagan, Bush I, Clinton and Phil Gramm took (read:"stole")away so that we don't have the bankers, insurance folks and Wall Streeters running the show and colluding on their nefarious schemes?
Isn't it about time for the "ordinary" folks to band together to promote a new party: The PEOPLES' PROGRESSIGVE PEACE PARTY? The Four P's ! ! !
I have developed a BURNING HATRED for these "blankety blank" (insert the harshest profanity in the blank) Wall Street mercenaries.
These guys are cold, ruthless, terrible.
Any politician who doesn't battle back at them, HARD, is likewise despicable.
In my day to day work I started to ask people what they do for a living. If I meet a bankster, lawyer, politician or any other professional parasite or one of their systemic hench(wo)men, I make it VERY clear what I think of them and I will not serve them. Most of them I can actually smell a mile away: it's an odor mix of sweaty greed and putrefaction, which the expensive perfume cannot fully conceal.
Corporate charters REQUIRE that these greed monkeys come up with some scheme or other to concentrate wealth. The corp system floats the turds...er, people who are willing to do this to the top of the system.
The problem is "corporate personhood" and charters that name only profit as a goal.
CORP IS BORG.
Well, since the first scam went so well & was so lucrative, why would they have learned anything except how to do it again? They haven't paid the price of their greed and wrecklessness, we have!
As long as there are uninformed people to exploit, the banksters maintain their schwindl. The corrupt system tightens the conditions for the banksters to squeeze ever more wealth from hardworking serfs. Enough is never enough. This will end in tears.
THE EMPIRE OF "THE CITY"
http://video.google.com/videoplay?docid=4675077383139148549
But in this case, we are not unsuspecting idiots. We simply went to buy life insurance. We didn't know it was tied to a casino game. But even if we did, would that negate the NEED to buy it? What would our other options be?
Everything we held dear has been plundered and destroyed in the name of the almighty dollar. Since there is nothing else to make money on, now they are rolling the dice on our LIVES?!! And so what does that do to health care reform or ANY reform that would make a whole, vibrant, healthy society?REGULATE Wall Street already for God's sake!!