Tuesday, October 06, 2009

Wall Street Clowns Are At It Again.

Persistency is a fool's best asset, as someone once said, and if that's true, on Wall Street, fools abound. The only ones more foolish, are we, the people, who pave their way.

Out-of-control greed is the name of their game. Even after financial meltdown, they persist. They take their game to a new level. This should come as no surprise, considering the main culprits responsible for our current financial crisis, not only knew (... two years before the meltdown: Bloomberg News reports that shortly after leaving Wall Street as Goldman Sachs' CEO, Henry Paulson was at Camp David warning the president and his staff of "over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street's face and affect the whole economy.") about the potential danger prior to collapse, they avoided repercussions by transferring those consequences to we, the people, but continued to reward themselves at our expense, all the while, innovating new ways to steal our wealth, setting up the next crash.

That's right; it's not enough that the banksters already contributed to one major disaster, and that their efforts "to prevent the financial system from collapsing wound up creating so much liquidity that it has now spawned another financial bubble", the banksters and Washington's 41,000 special-interest lobbyists continue to do just about anything to keep the status quo banks and encourage the Wall Street clowns to create and inflate shiny, bright, brand new combustible balloons to take to market.

In fact, Wall Street is breathing their hot air into one of those balloons right now. They are tapping into the $26 trillion life insurance industry, and creating a new financial product called "life settlements", or life-insurance securitizations.Credit Suisse

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 — though if people live longer than expected, investors could get poor returns or even lose money.

Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them. But some who have studied life settlements warn that insurers might have to raise premiums in the short term if they end up having to pay out more death claims than they had anticipated.
In addition to the bright and shiny "life settlement" balloon, the clowns have created re-remics (re-securitization of real estate mortgage investment conduits) which repackage their money-losing securities into higher-rated ones, very possibly outside the jurisdiction of the SEC. Morgan Stanley says at least $30 billion in residential re-remics have been done this year.


And let's not forget about the "carry trade" balloons, which at present, are carrying our Illustrious Wall Street clowns to "bubble profits and bubble bonuses".
The excess liquidity is even being used to finance a new "carry trade" in which global investors borrow at U.S. rates and buy government bonds in places like Australia, where prevailing rates are higher. Because the carry trade involves exchanging dollars for foreign currencies, it has been a major contributor to the recent decline in the dollar.

Naturally, this has been a blessing for Wall Street's biggest banks, whose trading desks have not only made big money executing and financing the investment strategies of others, but have also been trading actively for their own accounts. And with bubble profits come bubble bonuses.
The banksters are still operating the same way, lining their own pockets, inventing and marketing exotic waste products, focusing on short-term profits at the expense of long term sustainability, etc, at the cost of possibly, our nation. America's foundation is crumbling, our economy is melting down, our education system ranks lower than most industrialized nations, as well as our health care system, and a child poverty rate much higher than most other developed countries. Are we on the brink of becoming the richest third world country in the world? If we're not there already, considering the state of our nation?

3 comments:

Roth 17:07  

I copied this comment from Chimike on the Here and Now website re. a segment they had ..."life settlements"

"Re: “Viatical” purchases of life ins. of AIDS victims
I will try to used a measured tone in this comment, but it is difficult given the sheer ignorance and absolutely unsupported statements by the interviewee Ms. Anderson and by your reporter.

“viatical settlements in the 80s [purchases of life insurance policy of AIDS victims] had a very unfortunate end: It was very good for people but very bad for investors”

WHERE IS THE BACK-UP FOR THIS STATEMENT?

The combination therapies discussed became available only in 1995! There were no such therapies in the 1980s! AZT was the ONLY palliative drug and its use as such began in 1989!
As for these viatical sales being “good for people” [with AIDS], they were another method of stripping the dying of all their assets. Without doing so, they could not qualify for MEDICAID. Even on Medicaid, DRUG costs were NOT COVERED! The only hope for those with little or no money and living on MEDICAID and SS disability payments was to try to get into a drug test — where instead of the drug, they might receive a placebo. Moreover, when the combination therapies became available in the mid-nineties, the cost was approximately $25,000 PER YEAR, a staggering amount for those without health insurance or with a program (Medicaid) that did not cover drugs.

What the handling of the AIDS epidemic during the 1980s and most of the 1990s in the U.S. (not to mention globally) showed was a complete failure of the so-called “social safety net”. It didn’t matter to most Americans, because, hey, it was only “the gays” — and why not have “investors” pick them clean!

So, in addition to a completely inhumane, “business” oriented (do we regard Auschwitz as a “business”?), crass, and thoroughly disgusting statement, it is based on NO FACTS! This level of “reporting” should be an embarassment, at least, to all of you.

I might add that the underlying assumption is that: this was good for the GAY AIDS victims, because, of course, they had no families, no one for whom they might have wanted to provide by means of life insurance, no aged parents, no needful siblings, and, certainly, no lovers or significant others that society should have to pay any heed to. I have no printable words to describe this attitude. And it continues to this day. Shameful is the least I can say."

Buddy,  11:37  

Speak for yourself. I most certainly have "families, no one for whom they might have wanted to provide by means of life insurance, no aged parents, no needful siblings, and, certainly, no lovers or significant others that society should have to pay any heed to."

Anonymous,  12:51  

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