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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.
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.
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.
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.
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.