Halloween is still a month away, but ghouls,
ghosts, and other grotesque creatures are already roaming America's streets.
What makes them so horrifying is that they are the newly issued spawn of —
shriek! — Wall Street.
The new scheme is based on the mundane (but huge)
life insurance market, which Wall Street intends to exploit through a financial
mechanism called "life settlements." Often in need of cash, the ill and elderly
can turn to a small network of brokers who'll provide cash now in exchange for
being named the beneficiary of the recipient's life insurance policy. A broker
might pay $400,000 for a million-dollar policy.
Wall Streeters intend to set up extensive networks
of these brokers to entice sick and old folks into settlements with such
come-ons as these: "Cash-in BEFORE You Die!" "You CAN Cheat Death!" Next, Wall
Street banks will package thousands of these settlements into bonds that they'll
then sell 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
This is exhilarating for the investing elite, but
it will be a downer for life insurance customers, for it means that the price of
policies will go up.
Insurance companies base their price on the
calculation that many policyholders pay premiums for years, but then cancel
their policies before they die – thus, the insurer pays out nothing. Now, though
some faraway, third-party investor will keep the policy in force until the
former policyholder dies. To cover these unanticipated payouts, the companies
will 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