Wall Street Bets on You Dying–What Could Possibly Go Wrong?

Jan Buckler and Kathleen Tillwitz of DBRS, bringing you the market crash of 2015.

Jan Buckler and Kathleen Tillwitz of DBRS, bringing you the market crash of 2015.

I know you haven’t recovered from the housing bubble yet, but hey, good news–Wall Street has figured out the next big thing! As the New York Times reported this week,

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.

Doesn’t that sound great? It should work as well as, say, packaging mortgages together into bonds. Now, if you’ve been keeping track over the past 10-plus years, Wall Street gave us the dot com bubble that burst and destroyed your nest egg, regardless of whether you were day trading or prudently investing in a diversified portfolio. Then, just as you may have recovered from those losses, Wall Street sold us the housing bubble that sent millions of our retirement plans into  the crapper and crippled our economy. Should that chasten the Masters of the Universe? Of course not. No, we’ve earned another trip to bubble country. How much will this cycle of madness cost us? By us, of course, I don’t mean Wall Street, because they will make money regardless of the outcome, feeding off Tom Wolfe’s crumbs:

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…

Critics of life settlements believe “this defeats the idea of what life insurance is supposed to be,” said Steven Weisbart, senior vice president and chief economist for the Insurance Information Institute, a trade group. “It’s not an investment product, a gambling product…”

Undeterred, Wall Street is racing ahead for a simple reason: With $26 trillion of life insurance policies in force in the United States, the market could be huge…

“We’re hoping to get a herd stampeding after the first offering,” said one investment banker not authorized to speak to the news media…

Let’s mark this week as the beginning of the next bubble cycle, but let’s also note that documenting the madness of this “industry” that has become a casino will do us no good. Wall Street is moving forward without a shred of shame or even irony–we’re talking about betting on when our most vulnerable, the sick and the elderly, will die (talk about your death panels!). And when it’s over, we can blame the poor and minorities who were stupid enough to gamble, in this case on the life insurance policies that should be there to save their families from catastrophe. And then we can extend Wall Street the capital to retool for the next iteration of this winning formula.


Down and Out at the Movies

I hadn’t been to a movie since I saw Star Trek in Imax at the beginning of the summer, and I had wanted to see District 9, so I snuck out this afternoon to the AMC theater in my neighborhood. I settled in for the previews and got a string of reminders of how the movie industry has lost its way.

Of the previews I saw, two were for vampire movies, one was for a zombie movie, and another was for Pandorum, a movie by the producers of the Resident Evil series that looks almost exactly like any other of the indistinguishable Resident Evil series. This last movie stars Dennis Quaid, who managed also to appear in the trailer for Legion, which is about a group of misfits in a diner saving humanity from an onslaught of angels. Right.

Is this the best Hollywood can do? I mean, really, do we need two vampire films in the same set of previews? And is anyone in the business noticing that one of the summer’s more original movies, Up, and a well-written comedy, The Hangover, made tons of money?

While I’m feeling cranky, let me also point out how I increasingly prefer watching movies using the projector and Blu-ray player I set up in my basement over going to the theater. Today’s reason is image quality. I have a five year old projector, hardly top of the line, but at least the image I project is in focus. I got to see District 9 with an odd focus problem–the bottom center of the screen was out of focus, but the rest was more or less OK. For $7.75 (and that’s the discounted matinee price) it would be nice to see a nice image.

Great Songwriting, Just Not in English

I was listening to some old music from my childhood and came across this song, Amaneci en Tus Brazos, as performed by Maria Dolores Pradera, a Spaniard who showed genuine affection for Latin American music. See the original and my crappy translation, which I hope still captures the sublime lyrics of this song of a woman in love to her man:

Amanecí otra vez entre tus brazos
Y desperté llorando de alegría
Me cobije la cara con tus manos
Para seguirte amando todavia.

Te despertaste tú cási dormido
Y me querías decir no sé que cosa
Pero callé tu boca con mis besos
Y así pasaron muchas, muchas horas.

Cuando llegó la noche
Apareció la luna
Y entró por la ventana.
Que cosa más bonita
Cuando la luz del cielo
Iluminó tu cara.

Yo me volví a esconderme entre tus brazos
Tú me querias decir no sé que cosa
Pero callé tu boca con mis besos
Y asi pasaron muchas, muchas horas.

In English:

I woke up again in your arms
Crying tears of joy
I buried my face in your hands
So I could keep on loving you.

You woke up, practically asleep
And you tried to tell me something, I don’t know what it was
But I shut your mouth with my kisses
And so we spent many, many hours

When night came
The moon appeared
Through the window
What a beautiful sight
When that light in the sky
Lit up your face

And again I hid in your arms
You tried to tell me something, I don’t know what it was
But I shut your mouth with my kisses
And so we spent many, many hours

Nixon and Frost

Watched the 1977 Watergate interview last night, and it was a revelation. I was struck at how skillful a lawyer Nixon was, and I also marveled at his humanity. All of his strengths and flaws were on full display, but at the end, his “apology” managed to transcend his self-pitying bent to reveal the pain he felt and his regret.

I was also struck with David Frost’s argumentative, prosecutorial approach with Nixon. People whining about how Sarah Palin was treated by the press should take a look at these interviews if they want to see real toughness. Palin got off easy, and it reminds us of what lapdogs the press have become. I’ll watch Ron Howard’s Frost/Nixon on DVD, but I can’t imagine greater drama than the real thing.

Rachel Getting Married–Hated it!

I like Anne Hathaway, and was looking forward to seeing her in her Oscar-nominated role. I had to turn Rachel Getting Married off about 45 long minutes into the movie, however. The Jonathan Demme (who should know better) film is painful to watch–not because Hathaway’s character is just out of rehab, but because the actors, including the usually interesting Hathaway, are so precious and annoying. Precious is the word that kept running through my head over and over again: precious, self-consciously improvised dialogue. Precious mugging by the miscast Bill Irwin as Hathaway’s father. Precious mugging by everybody in the unending wedding rehearsal scene. Bleahhh, as Snoopy would say.



Fair Price Comparisons for Electric Cars

Journalists unfortunately are not serving us well when covering the development of electric cars. Rather than taking a clear look at the issue, reporters–who are, after all, like the rest of us–too easily fall into fallacies that serve the automotive and energy status quo. A recent Washington Post article is a textbook example. The article begins talking about the promise of the Chevrolet Volt, but quickly gets to a criticism:

The problem is GM will likely have to price the vehicle far higher than a comparable family car with a gas-powered engine, putting it out of reach for many consumers, particularly if oil prices remain low.

This is a false comparison because it assumes that retail gas prices reflect the actual cost of using that fuel. In fact, while retail gas prices are kept artificially low in the United States, the hidden costs of gasoline–from the military forces required to secure oil supplies to environmental and health effects–could well make the true price of a gas-driven car much closer to the cost of owning and operating a plug-in electric vehicle. There may be good metrics for a proper comparison out there, but damning the Volt because it retails at $10,000 more than “comparable” gas cars is crappy analysis. How about considering the differences in maintenance for a car that requires no oil changes, spark plugs, fuel injectors, air filters, transmission fluid, or timing belts?

The article then goes on to talk about competing strategies, such as more efficient hybrids from other companies and the luxury-first approach that Tesla took. Tesla’s model is based on the idea of having the first generation of these cars start as luxury models for early adopters. The argument holds that those early adopters will make the technology cheaper over time, paving the way for mass adoption as was the case with DVD players and flat screen TVs. As the Tesla CEO said, “We didn’t start with a Honda Civic because it would be a $70,000 to $80,000 Honda Civic.”

Fair enough. But we have a lot more at stake in the mass production of electric cars than we did in the development of the DVD. Moreover, the Volt’s critics are missing the fact that the Volt is coming in at just $10,000 over other family cars. By doing so, Chevy is showing Tesla that GM can leapfrog the luxury step and deliver the true game changer–a mass-production EV developed and built in this country. For the value of moving our country that much faster toward the day when we abandon the internal combustion engine, that much faster toward the day we no longer need to send our troops to secure Middle Eastern oil, a $10,000 tax credit or other incentive would be money well spent.

Open the Closet Door

Five years ago, my brother killed himself. He suffered from depression, but hid it from the many people who loved him. He sought treatment sporadically, and wouldn’t stay with it for more than a session or two of therapy. For him, alcohol was his primary treatment.

I believe my brother acted the way he did because he accepted the still powerful view that depression equals weakness, a character flaw that can be overcome by the strong. This fit my brother’s world view that painted those who suffered as weak losers who deserved their fate. This world view is deeply embedded in our national myth of rugged individualism. It has been nurtured by “conservatives” as a powerful tool to win support for their dream of dismantling all vestiges of the social safety net built beginning with Roosevelt. My brother was a proud member of that political movement.

My brother was profoundly wrong about depression, and had I known more about his health–we lived on opposite sides of the planet–I would have fought with him to change his mind. As it was, I knew enough to tell him during our brief times together about my success with therapy, but I could tell it didn’t resonate for him. I knew too well he saw therapy as something for wimps. His death, however, cemented my commitment to let no one I meet with this illness go without help. That has made me a pain in the ass to a number of people, but I don’t care.

In the broader sense, however, a greater good can be done if we can beat back the stigma that is still out there. I know it’s out there because I see it in the reluctance to treat mental health care on an equal footing with other care by insurance companies. I see it in people in positions of great authority who still feel comfortable blithely describing depression as a deficiency that justifies their suffering. If you are depressed, you still have to wonder how seeking treatment could hurt your career, despite disclaimers from employers that promise otherwise.

I’m beginning to think that the only way to combat the stigma is to take a page from gay activists like Harvey Milk, who understood that knowing someone makes it much harder to preserve the distance that prejudice needs to survive. Harvey and others urged gays to “out” themselves to their family, friends, and employers to fight discrimination, and I believe those of us who suffer from mental illness need to do the same. I suffer from depression and anxiety; have for most of my life. I treat it with the help of fine physicians, just as others would treat their hypertension or diabetes. I’m grateful for the treatment, for my friends and family, and for the blessing of wealth that allows me to afford my treatment. I hope to see a day where all of us receive the medical care we need.

If you are suffering from depression, you are not alone. Let somebody know. Let’s shatter the closet door together.