Betting On Death: Wall Street's Latest Voodoo Moneymaking Scheme

What happens on Wall Street stays on Wall Street...unless they lose their shirts and need us to bail them out against our will because our elected representatives are in the fucking bag.

While our economy is still in shambles, Wall Street is already paving the way for the next big bubble: the death bubble.

The New York Times recently featured an incredibly disturbing article titled, “Wall Street Pursues Profit in Bundles of Life Insurance.” Here’s how it works:

“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…”

After reading that last line, I paused in mid sentence for a few seconds, and scrolled back up the page to see if I had unwittingly navigated my way to The Onion, because this sure read like a satire to me. Nope. Then I wondered if the Yes Men had outdone themselves and actually hacked the New York Times website (instead of simply printing and distributing fake copies of the paper as they did last November). Slowly I began to realize that this wasn’t a joke, and that this article by Jenny Anderson was discussing an all-too real developmental-stage speculative enterprise that literally bets on death.

You’ve got to hand it to Wall Street. These people remain undeterred in their never-ending drive to make profit where it was thought there was no profit to be made. They’ve had two major bubbles in the last decade, both brought on by wanton speculation fueled by the kind of cockeyed, sky’s-the-limit optimism you see from the cheerleaders on CNBC and in other financial media. Both bubbles burst quite dramatically, although the latter was—and still very much remains—an economic crisis of epic proportions. And yet, here we have some investment bankers who have already drawn up and are starting to push the next great moneymaking scheme before we’ve even gotten ourselves out of the current fuckup which they helped create. And the kicker is, it works in the same way those dubious mortgage securities did (and still do). I can only hope that the anonymous banker in the article who said, “We’re hoping to get a herd stampeding after the first offering,” is completely wrong, but if he’s right, we might just have another bubble—the death bubble—coming down the pike in a few years time.

Of course, this lament of mine will be moot if our economy collapses before life insurance speculation can matter. This is not some remote possibility. The fundamentals of the U.S. economy are still terrible, regardless of how well the Dow has been doing. (Don’t even get me started on those fuckers at CNBC.) We still have serious problems in this country, starting with the dollar. Not that anyone in a position to do anything about our falling dollar agrees this assessment, but that’s the reality. If I had the balls, I’d take a trip to the Bureau of Engraving and Printing at Treasury and destroy the presses myself. Would this be the only way the government would stop printing money? It would seem so. If this lunacy isn’t stopped soon, it’s going to take an SUV full of $100 bills just to buy a Whopper with cheese.

While the falling dollar has expectedly helped to narrow the U.S. trade deficit over the past year (July’s data notwithstanding), the Baltic Dry Index indicates that international trade has declined in absolute terms. Just about every U.S. manufacturing sector has been declining, with the exception of the arms sector. As such, the official U.S. unemployment rate is 9.7%, but this figure is bunk, as it includes neither those unemployed Americans who have simply stopped looking for work, nor former full-time workers who have been forced to work part-time (often at minimum wage). When these folks are included, you get a 16.8% unemployment rate—and a much realer sense of just how shitty the U.S. economy is.

But enough gloom and doom about our economy, and back to rich people betting on Americans dropping dead.

Now, I’m not one of those people who thinks a cure for cancer has been found and that the medical industry is suppressing it because they want to keep cashing in on the lucrative cancer treatment business. However, it is not unreasonable to ask what effects large-scale death speculation would have. Right now we have no way of knowing just how big this will become, but if the life insurance speculation game (and that’s really what it is to these people) becomes as popular as (subprime) mortgage-backed securities were earlier this decade, there are going to be a lot of rich and powerful investors out there who stand to gain everything from a retardation of medical innovation. Theoretically under this scheme, if you hold bundles of these securitized life insurance policies, it would be just wonderful for you if somehow hospitals, doctors, and all medicine and knowledge about the practice of medicine just disappeared, and we as a people had to resort to playing with snakes and making sacrifices to please Asclepius in the hopes that he will heal us.

This is what the moneyed interests of this country want. While they’re busy turning their millions and billions into more millions and billions in relatively short order thanks to the casino economy, the rest of us continue to slave away for ever-decreasing real wages at jobs we’re not sure how long we’ll have. That way, we’re continually worried about job security and our overall welfare and won’t raise a stink about being smacked around all the time. We are serfs in a neo-fiefdom. We’re easily replaceable. And we’re fun to gamble on—our credit, our mortgages, and soon our life insurance policies.

I’m an advocate of the free market with two qualifications: (1) no corporate welfare; if a business needs state subsidies, it doesn’t deserve to exist. (2) Regulation, regulation, regulation. Ideally, no regulation would be necessary. However, as has been well-documented, big business is always inventing new and exciting ways to bend us over and take full advantage of our vulnerabilities. If you’re a worker, the main thing to know about companies in the free market is this: if there’s nothing stopping them, they will fuck you if they think fucking you will be profitable. It’s the nature of the system, which is why safeguards are needed to prevent wholesale raping and pillaging.

Now if you’ll excuse me, this serf has some land to till.

- Max