Tweet
The geniuses of Wall Street have decided that the next big thing is betting on death. Yes, Wall Street will be rooting for sick people to die right away, at least as soon as the dying sell them their life insurance policies. It’s the latest version of a Death Panel: it gives investors a reason to stop health care reform.
Here’s how it works. Sick people need money. Most folks have term policies that aren’t worth anything to them while they live. They can’t pay for health care with money that won’t be there until they die. So, they sell their policies to Wall Street firms for something less than the face value but a good bit more than nothing. Wall Street wizards package them into bonds.
They found a rating agency ready to assign them AAA ratings. Of course, DBRS, and its math whiz with a degree in nuclear physics, have figured out that one needs to diversify to spread the risk:
A bond made up of life settlements would ideally have policies from people with a range of diseases — leukemia, lung cancer, heart disease, breast cancer, diabetes, Alzheimer’s. That is because if too many people with leukemia are in the securitization portfolio, and a cure is developed, the value of the bond would plummet.
That’s right; diversity is the spice of Vulture Bonds.
Once rated, brokers have a new product to market, just like those collateralized mortgages that were so successful at pouring fees into the pockets of the rich. Then they wait like the Himalayan Vultures they are for the sick to die, as soon as possible, thank you. The earlier they die, the more money investors make. Heaven forbid people should linger for a long life, that would reduce their profits.
And just like with CMOs, investors don’t even have to own the bonds to bet on death:
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.
Does anyone think we should give those creeps an incentive to stop health care reform? When investors have a financial stake in people dying, they sure don’t want their subjects to have health care. Even more of the rich will have a reason to kill reform so people will die immediately. It even gives rich investors a reason to demand the right to euthanasia.
This is Wall Street’s idea of innovation. Aren’t we lucky to have carrion birds roosting high on Wall Street? Aren’t they really worth the billions they take out of our pockets?
39 Comments
Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About Firedoglake
This idea is so pantently insane, I’m just gobsmacked. If this is where we have arrived thanks to Wall Street, NO WONDER health insurance reform is crippled. It’s all part of a piece.
Well hey now, they’ve pretty much maxed out the profits on sickness itself. People who don’t own houses or make a good living or have affordable credit available anymore are not a good pool of suckers to rob. You can’t milk much more out of utilities and goods either, what with the falling incomes and high unemployment. What else is there to capitalize but death?
Give ‘em an A+ for creativity. And an A+ for chutzpah for being able to find yet another way to take advantage of desperate, dying Americans who probably won’t realize that they are signing away the last little bit of economic power they own in order to buy that pain medication. And then there’s the possibility of losing money if enough of the dying don’t really die but actually recover to live another few years.
It’s a plan that only sane human beings with an ounce of compassion would object to and we all know that kind has no clout in today’s America. And just think, if the health care reform bill is really crappy then that will cause these things to skyrocket in value since more and more Americans will be guaranteed death instead of recovery. It’s a win-win for every investor and congress critter!
Himalyan Vultures: how about air burials in Manhattan?? Every day at 4:30pm for closing bell, perhaps.
Viatical investments have been around for a number of years but they tended to focus on just one policy (person) at a time. That wasn’t really all that efficient plus you were putting all your eggs in one basket. If the person ended up being healthier than originally believed you had to wait a long time for a return.
The bundling of many life policies is the key to viaticals new popularity. It’s a great investment as long as someone doesn’t come along and find a cure for cancer or something (or someone doesn’t come along and pass a major health care reform bill).
Does anyone else see how this might lead to a lack of private funding for, oh, say, cancer research or hypertension cures?
It gives a whole new meaning to the term “vulture investor”. Compare this with this.
That’s a great idea. Maybe we could put it in the contract, sort of like professional courtesy.
A culture of death has invaded the US body politic.
Are we setting up the scenes for the dark sci-fi? What will they call this era? The Crazy Years? The Idiot Interregnum?
I find this repulsive, and touched on it at a post over at WTF today.
When all the little people are worth more dead than alive, what does that do to health care INDEED!!!
excellent point, masaccio.
I cannot believe this is legal. How grotesque.
We’re all Afghans at a wedding now.
Golman Sachs is buying Pharmaceuticals and Health Insurance companies. These predators want a centralized, health care system, run by corporations. Medical care givers will be required to give the treatments approved by Goldman Sachs.
I’ve got a name for them… Soylent Investment Corp. Were Josef Mengele alive, he could have been the CEO. The Nazis made one mistake, they didn’t send the murdered Jews to meat packing plants.
What a nightmare world we live in, I wanna get off.
I seem to remember first hearing of this in the early days of AIDS.
So I think in honor of that picture we should call them vulture bonds.
I saw this story when it came out and at the time I thought it showed how unreformed the financial system remains. The old and sick, and the rest of us too, should not have to sell off our wealth, our estates and legacies just to purchase healthcare or medicines. But it is typical that Wall Street would seek to profit from it. I can see already how they will spin this as some form of altruism on their part.
Ha! I KNEW you would write about this – great minds!
One of the other lovely little pieces of this is that the price of life insurance premiums will rise immediately, which is just one more way of raising costs for people who are trying to protect their families and for companies like mine who offer life insurance as a benefit.
So even if we don’t assume a doomsday scenario of corporate death panels this remains another exciting new way for speculators to wring money out of the system without actually creating goods, jobs, services, infrastructure or anything else that provides an actual benefit to society.
I think the very least we should demand is that the Democrats speak out about this very sick plan. We are truly spiraling down.
One source of policies is banks collecting on guarantees. The guarantor pledges a life insurance policy to the bank. When the loan goes into default, the bank has the right to take the policy over and pay premiums. Eventually they get something back. If there were a market, the bank could collect something earlier.
Let’s see if we hear about this when the Masters of The Universe mount their defense on Tuesday.
Goldman Sachs loves them some high net worth individuals, and greedy corporations, financial disaster capitalists and governments. People, not so much. The next services provided by GS will include bankrupt life insurance companies, that will rob their policy holders.
Isn’t this just another method of dealing insurance across state lines?
And now the market has a vested interest in NOT finding a cure for lukemia, or aids, or whatever.
C’mon Seven. Momma needs a new pair o’ shoes…
Jeez, Louise…
Yes, Charlie Brown, there are people out there who want you to die.
It is my understanding this was being done on a smaller scale during the beginning years of AIDS, but then the prognosis changed and not so many people were dying. Ha, they lost money. This time around they’ll include many more diseases to spread the risk. I hope someone in DC picks up on this and NIXES it ASAP, if they can.
Electronic medical records and Goldman Sachs:
Check THIS out:
RPT-UPDATE 2-Emdeon latest to jump after IPO | Deals | IPOs | ReutersAug 12, 2009 … N), Goldman Sachs & Co, (GS.N) UBS Investment Bank (UBSN. … by two private equity firms, General Atlantic Partners and Hellman & Friedman, …
http://www.reuters.com/article/……..9220090812 – Cached – Similar
Emdeon IPO Rises 6.6%, Ending Off Day’s High – WSJ.comAug 13, 2009 … Investors flocked to the IPO of Emdeon Inc., driving up shares of the medical-billing … added to the deal — were sold by private-equity firm General Atlantic LLC. … Goldman Sachs Group Inc.( GS ). 162.97, 1.31, 9/4 …
online.wsj.com/article/SB125009029310626185.html – Cached – Similar
Emdeon IPO: Healthcare Reform Beneficiary (EM) – 24/7 Wall St.Aug 12, 2009 … If Emdeon sounds familiar, that is because General Atlantic Partners … Morgan Stanley, Goldman Sachs, UBS, and Barclays Capital are listed …
247wallst.com/…/emdeon-ipo-healthcare-reform-beneficiary-em/ – Cached – Similar
Incidentally, General Atlantic Partners had extensive investments in United Health Care at one time, and one of the GAP execs on thye West Coast had previously worked at Goldman Sachs.
I seem to recall that there were a lot of problems with viaticals and the way(s) they were being sold. As in, it was pretty much a money-losing proposition. (I’d rather buy an annuity. Safer. More reliable.)
Emdeon: An Obama IPO? – BloggingStocksAug 12, 2009 … Going into its IPO, investors were expecting nice gains from Emdeon. Well, the company did not disappoint. Last night, the company priced …
http://www.bloggingstocks.com/2009/08…..obama-ipo/ – Cached – Similar
Say you know you have only a year to live and you are broke except for a $200,000 term life policy. The only thing you wish you could do is take a round the world cruise. But like I said, you’re broke. What’s the solution? A viatical arrangement.
They have their uses and now they are more regulated.
A “public option” would be very costly to Green Soylent. But we know Paulson and Blankfein were on the phone to each other more than teenagers in puppy love. That got GS $700000000000000 or so.
So I am thinkng that GS will not allow a Public Option or national health care under any circumstances.
Don’t the banks write off the cost of the premiums,and the interests off the loans,too?
I see Wall Street has finally found its natural calling, death pools.
It has to be a hoax.
Viaticals are victuals for vultures.
The vultures are the fattest where the carrion is the most plentiful.
These kinds of investments have been around for a while, my father dabbled in them a little bit back in the 90’s on the advice of his corporate financial advisor. After about 3 months the perversity of it got to him and his business partner, so they divested from them ASAP.
To him it felt like shorting on somebody’s life, and his principled opposition to shorting in the market extended to actual people the minute the dots were all connected.
Securitization of these things is repugnant at best.
This creates a OMGFINGXBOX-HUGE problem in the propensity for self-dealing and bad faith investment; doesn’t it? Where somebody’s actual health insurance policy is the original asset, and the life insurance policy becomes tantamount to credit default swap to hedge against the payouts on the health policy? If there is ever a situation where there isn’t impossibly strict separation of interests between those two policy providers, these won’t be “death panels;” what you’ll have would be tantamount to private for-profit death squads. Literally hunting people down to capitalize on their death.
And, unless I misunderstand, with Goldman Sach’s tie to one of the BIGGEST providers of info on Medicare records,Emdeon@26 and 28-upthread- isn’t that kinda like insider info-or am I misreading?
The big problem with life insurance is that you may need money now while you are still alive. Any process that increases the sale value of a life insurance policy for such people is to be applauded. Not a time or place to be squeamish.
I actually think that linking this information (the real death panels) to health care reform (not insurance reform) may benefit our side. How much more blatant can it be that the elites are using us as currency for their luxuries, excesses and, of course, POWER? Is there a progressive spinmeister out there who can turn this into a “phrase” that would get us a massive demonstration on Washington, D.C. for single-payer?
I’d go!
Yes, it could be a lot like insider trading. Particularly if medical transcription software had ‘reporters’ written into it to send ‘data’ to some collector function designed to aggregate the data and then use it to price the ‘financial products’.
Reprehensible.
And zarf@37: the big problem with life insurance is life insurance; don’t mix it up and confound it with **health** insurance.
Any process that ‘increases the sale value of a life insurance policy for such people’ — that inadvertantly creates incentives for anyone to be worth ‘more dead than alive’ is ghoulish, cruel, stupid, and venal.
People need health insurance to maintain their good health.
The may need ‘life insurance’ policies as part of their financial planning, but no one needs to enable a system whereby it is profitable for Wall Street to make more money through ‘more, more frequent deaths’ than by helping people remain healthy and productive.
This is one of those milestones, in which it is clear that the system of debt capitalism is not working. After all, any economy that finds itself in such desperate straits that it creates ‘financial instruments’ to bet on the early deaths of people is not sustainable over time.