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. The index is similar to tradable stock market indices that allow
investors to bet on the overall direction of the market without buying stocks.
Taibbi points out two major problems with this latest casino game:
The article does discuss the probable negative consequence that will come
with a severe drop in the number of lapsed policies (until now, there were
always a certain number of people who would let their insurance lapse either
because they outlived their beneficiaries or could no longer afford the
premiums; now, they will simply sell their policies instead of letting them
lapse). The likely result here is higher premiums across the board for the
ordinary person, which I suppose is an important point to consider.
But even beyond that… what the fuck??? This feels like financial
innovation as practiced by Josef Mengele meets the Zucker Brothers; not just
evil, but wacky evil. I don’t even want to think about what happens when Goldman
Sachs suddenly has a large financial stake in the premature deaths of a bunch of
old people. Where are the crazy police? Where is the crack federal crazy squad
with the big butterfly net? I don’t know about betting on anyone’s life
expectancy, but I think I’d like to bet on whether or not this idea ends
I wonder if Sarah Palin and the rest of the GOP is gonna go after Wall Street on this. I mean...these are the same folks that tell us how wonderful greed is. What a strong motivating and powerful tool it is, right? Well...is it that far of a jump to think that the Gordon Gekkos of the world could start putting together wet teams?