The Next Big Wall St. Scheme: Securitized Death

Originally posted by Crakeur

Energy Credits are also being built into the next "big thing." Check out Mike Taibbi's article about Goldman Sachs and their bubble crushing practices.

I read that article a few months back and it was a great read. It helped to connect some of my already existing dots and it also gave me a better understanding of how the market is really run. (I admit the economics class I took in college bored me to tears and was down right confusing towards the end!!)

I knew about the energy credits, but I am wondering why it has taken so long to get going. I havent heard anything about it for the last couple of months. You are right though about the people being the ones to have to suffer & pay the price. Sadly isnt that always the case? I honestly dont know if our economy could handle another bubble & bubble-burst.

reply to post by kosmicjack


S&F,

First I thought this was funny. I cant believe what I'm reading. securitize and resell these policies. It sounds like the broke hedge funds have a new plan. I wonder what the value of Aunt Edna will be.

They never learn from their mistakes. Its bound to implode like the mortgage securitizations of CDO's,,, worthless tranches. Wow!

I really can't believe ATS isn't more outraged about this.

Here is a great article with some sharp commentary along the lines of what Crakeur added:

wallstreetpit.com...

When Wall Street’s commodities bubble crashed last year, I asked whether the next bubble might be in securitized body parts. Wall Street would search the world for transplantable organs, holding them in cold storage as collateral against securities sold to managed money such as pension funds. Of course, it was meant to be an apocryphal story about unregulated banksters gone wild. But as the NYT reports, Wall Street really is moving forward to market bets on death. The banksters would purchase life insurance policies, pool and tranch them, and sell securities that allow money managers to bet that the underlying “collateral” (human beings) will die an untimely death. You can’t make this stuff up.

This is just the latest Wall Street scheme to profit on death, of course. It has been marketing credit default swaps that allow one to bet on the death of firms, cities, and even nations. And the commodities futures speculation pushed by Goldman (NYSE:GS) caused starvation and death around the globe when the prices of agricultural products exploded (along with the price of gasoline) between 2004 and 2008. But now Goldman will directly cash-in on death.

Here is how it works. Goldman will package a bunch of life insurance policies of individuals with an alphabet soup of diseases: AIDS, leukemia, lung cancer, heart disease, breast cancer, diabetes, and Alzheimer’s. The idea is to diversify across diseases to protect “investors” from the horror that a cure might be found for one or more afflictions–prolonging life and reducing profits. These policies are the collateral behind securities graded by those same ratings agencies that thought subprime mortgages should be as safe as US Treasuries. Investors purchase the securities, paying fees to Wall Street originators. The underlying collateralized humans receive a single pay-out. Securities holders pay the life insurance premiums until the “collateral” dies, at which point they receive the death benefits. Naturally, managed money hopes death comes sooner rather than later.

Moral hazards abound. There is a fundamental reason why you are not permitted to take out fire insurance on your neighbor’s house: you would have a strong interest in seeing that house burn. If you held a life insurance policy on him, you probably would not warn him about the loose lug nuts on his Volvo. Heck, if you lost your job and you were sufficiently ethically challenged, you might even loosen them yourself.

Imagine the hit to portfolios of securitized death if universal health care were to make it through Congress. Or the efforts by Wall Street to keep new miracle drugs off the market if they were capable of extending life of human collateral. Who knows, perhaps the bankster’s next investment product will be gansters in the business of guaranteeing lifespans do not exceed actuarially-based estimates...

Originally posted by detachedindividualThey will kill, they will "allow deaths" through the control of medical systems and services, you are essentially giving them permission to murder for profit.

Evidently people are viewing it the same way you are:

www.huffingtonpost.com...

Any remaining doubt that a for-profit, private monopoly of our nation's health care system is a dangerous idea should be removed by the recent news that Wall Street plans to reap profits from people not living to collect their life insurance policies.

False accusations of plans for government "death panels" was ironic enough, given that private insurance companies have long entrenched real death panels deep within their profit-driven bureaucracy.

reply to post by kosmicjack


ATS members will be angry but most that discuss financial or business decisions are off line today,, I think.

I'm curious for their input, as well! This is some heavy stuff here kosmik. I thought Timmy Geitner was in charge of watching out for these sort of things.

Both Obama and Timmy declared they were taking over hedging and wall street. I'd like to see that happen.

reply to post by sylvrshadow


I dont want any more bubble bursts either but I expect next will be Credit Unions, Credit card companies, etc.

Speaking of securitizing death I hope my 100,000 life insurance policy doesnt depreciate the older I get.

This is funny. I can see it now. I know how to make millions. Pick a bunch of healthy individuals in a poor neighbourhood and offer them a pittley little amount to sign an "investiment certificate", say $1000. Then the certificate gives you the right to take out a policy for say 1 million on these people. Get 5000 people and then you have a huge potential for cash .... if they all die. SO you make sure there is a riot or a hurricane coming and you arrange for help to be slow arriving. That way you can be sure a good portion of those investments pay out.

On a related story I used to work for a big company in the mid 90's that I found out was taking out big policies on the best sales people and a few of us design staff. I found out when a copy of the policy was accidently given to me by the substitute secretary. She didn't know to keep an eye for these and give them to HR to the employee who's name was on it. I was really surprised when I opened it and found what the premiums where and I called the insurance company to say I never applied for a policy.

The insurance provider told me who the payable was and that I was not paying for the policy, the nice lady told me that it is fairly common for big companies to take out big policies on critical employees who's death would be a negative financial impact on the company. That way if the employee dies the company gets the money that the would loose in sales by not having that employee. I was creaped out by this and that was a major reason for leaving a short time later. I actually phoned the insurance lady and told her I had quite prior to telling my boss, that way she would cancel the policy (once you quite the policy becomes void and ends). The company was having financial problems when they started taking out these policies and I was shocked that the premium was more than my take home pay per month. So my suspicious nature made me want to cover my butt rather than risk having an accident.

Just curious, does anyone know if life insurance companies will even pay out in the event we lose hundreds of thousands due to a pandemic?

I asked an insurance broker and he told me they wouldn't pay a dime because a pandemic is an act of God. But then he thought being cut up into tiny pieces the likes of the Manson family would also be an act of God, as well as being ran down by a pissed off Office Max employee in a mini van.

Star and flag for provoking thought because that's tough to do

reply to post by wonderworld


I really think not just the ATS community, but many different cyber communities, and live communities like to bury their heads in the ole' proverbial sand.

We've all been trained in the current society for a very long time that We cannot do anything on Our personal level; in Our own communities.

Case in point, I was talking to a cousin in Spokane, Wa. I was talking to her about the power of People should they just stand up. My cousin couldn't grasp the concept in any form; it was her opinion that People had to be in Washington D.C. to protest.

In reality, We all pay taxes, and We all make this system run, or the World go round.

The news in the OP is of a topic which People need to wake up to the very real fact of they are power, and "We The People" are the real change.

Until this critical aspect of reality is reached then most imo will continue not to be too interested in bad news.

There's lot's of bad news..... A larger second wave of home foreclosures, the derivatives bubble, CEO's making more than they ever have via bonuses, and incomes that are at record ratios now of 310:1,.......the list goes on really really long

S&F to the OP

reply to post by sanchoearlyjones

Hi sancho

Yes there is always one scheme after another to keep the ball rolling, with greed. I think they call it swimming with the sharks. This is mind boggling.

No one learned a thing. Gravity always wins. Stocks were too high in October 07, most got out then. Now again it’s gone up way too fast. Not even the pro’s get it and if they do they cant see past the greed.

Yes we the people can do a lot but there are more powerful influences behind the scenes that have an unforeseen outcome.

Maybe I should visit your cousin, that's kind of funny.

reply to post by Sundancer


the insurance company would file for bankruptcy.

You don't have to be a Conspiracy Theorist to connect all of these dots. People are catching on to this absurdity and putting all of the pieces together:

www.alternet.org...

Now we know why America's oligarchs are fighting to keep the rest of us stuck in the world's worst health care system: the more we die, the more billions Wall Street will earn. A recent article in The New York Times exposed how Wall Street is licking its lips over a new scheme to make hundreds of billions in profits by creating financial instruments that will profit off of millions of terminally-ill Americans' agony, desperation, and death. The only thing standing in the way of this massive new Wall Street scheme is the kind of health care reform that might allow Americans to live longer lives. Yep, this is what we spent trillions of dollars bailing out Wall Street for: so that they can kill us for profit.

It sounds like something out of an old sci-fi flick like War of the Worlds, with America's billionaires as the brutal aliens harvesting our humanoid blood and tissue to fertilize their country club golf courses. Yet it makes logical sense: Wall Street has nowhere else to turn for its fat profits. Our banking class has already destroyed everything else in this country that had any value, from America's industrial base to the American Dream itself, its housing market--whatever Wall Street could securitize, leverage, flip or restructure, they destroyed for good. There's nothing left to strip and pawn -- except for our lives.

Yes, it's sick as hell, so vile and evil that it almost defies understanding. But I'll try: see, if I was a gambling man, I'd wager that the thing that gave our banker billionaires the idea to turn our deaths into "death bonds" was the way they so effortlessly looted trillions of taxpayer bailout dollars from us, so quickly, and with so little resistance.

reply to post by kosmicjack


it all seems frighteningly similar to a book I just read called Patient Zero. It involves a terrorist plot to infect americans with a lab created virus that creates zombie like people.
Spoiler Alert - do not read on if you intend to read the book, it's a good one.




The financial backers? A guy who owns a pharmaceutical company. His goal is not to infect all americans but to create a big enough scare that the gov't will pump billions of dollars into his company, and other pharmaceuticals, to find a cure or an vaccine.

So why is this becoming more lucrative all of the sudden? First, more people are in financial trouble. Second, more elderly now than ever before (aging Boomers). And last and most speculatively, we're on the verge of a pandemic. Sounds like easy money.

It's so ironic/scary that the biggest investors in this type of bond is pension funds. Don't they have an monetary interest in the time-lines of their investor's lives?


thismatter.com...

The way it works nowadays is that the seller, usually older than 70, goes to a viatical broker to find buyers for the seller’s policy. The broker usually obtains 3 bids for a policy from life settlement providers, who are mostly small firms, and bids may range from about 20% to 80% of the policy’s value, depending on how long the insured is expected to live. The buyers take over the payment of premiums—otherwise the seller may stop paying, thereby terminating the policy—and collect when the seller dies.

People turn to viatical settlements because they need the money now or don’t want to continue paying premiums, and they receive more money than surrendering the policy to the insurance company for cash.

Brokers generally receive commissions of 5-6% which are paid by seller. Presently there is a lot of fraud in this area, and only 26 states require viatical brokers to get a license.

Most of the buyers are viatical settlement companies, who then resell the policies to hedge funds or investment banks, who then securitizes them into asset-backed securities backed by a pool of about 200 policies. The anticipated buyers of these securities are mainly institutional investors, such as pension funds.

[edit on 10/9/2009 by kosmicjack]