I stay clear of conspiracy theories. Who needs them? They’re for losers. I’m not unsympathetic though; with the global pandemic and weekly environmental catastrophes as a backdrop, far too many people nowadays have a vested interest in being uninformed and victimized.
In other words, there remains a convenient advantage to being an enthusiastic consumer, to striving for yard-of-the-month club while humanity blithely skips off the cliff. When the credit card gets maxed out, we blame the lousy economy, the corrupt political class, the elites and their rapacious cabals for rigging the system in their favor.
At bit more about the rapacious cabals by the way. For better or worse, depending on your bank account, the system is rigged. After all, it wouldn’t be a free market without the freedom to manipulate it. However, there is not a thing conspiratorial about who holds the reins. Just follow the dinero to where it accumulates into ever larger piles.
Some of those private hills of gold ought to disturb us, perhaps signal our outrage. Specifically, I’m referring to the issuance and sale of pandemic bonds and catastrophe bonds. Essentially, these are side bets on human suffering made by institutional investors. If you are in need of a cabal look no further.
Catastrophe bonds — “cat bonds” to those in the know — were first issued in 1997 by reinsurance corporations like Swiss Re and Munich Re. These are the organizations that provide insurance for insurance companies like Allstate and State Farm. They cover mega-losses that run into the billions of dollars.
These bonds are hardly an attempt to mitigate the causes of global warming or even to relocate vulnerable human populations from our hurricane-prone coasts; they provide these insurance giants with added capital while bondholders receive an above market coupon (interest payment) — until mother nature’s next major temper tantrum.
According to NOAA’s National Center for Environmental Information, in 2020 there were 16 “temper tantrums” with billion-dollar-plus price tags in the U.S. This is the raw financial sewage of our system hard at work. We need to protect against corporate insolvency at all costs — never mind the millions of lives literally under water, life savings gone. The smartest folks in the room are well incentivized to work out the complex modeling of “weather derivatives” so that investors are protected.
And, lest we forget, all that continued development and rebuilding along our saturated coasts are really good for employment and GDP numbers. I would tone down the sarcasm if it was not for the fairly fresh memory of 2008 and Wall Street’s monetization of junk (subprime) mortgages. Who ultimately paid for that gimmickry?
Susan Erikson of Simon Fraser University recently wrote of the ethical dilemma in “setting up a profit motive to address human suffering.” Her context was not the sale of catastrophe bonds, but rather pandemic bonds. A corporate casino that takes bets on global health. Who wants in on some of that action?
Same basic idea with a surreal twist. The World Bank began issuing bonds for private investors in 2017, shortly after then-World Bank President Jim Yong Kim endorsed pandemic bonds as “the evolution of capital markets as a force for good.” Like catastrophe bonds, the bondholders are paid a high interest rate — as long, that is, human population is pandemic-free. An actual pandemic is a “triggering event” which stops payouts to bondholders.
Yet even the deaths of 2,300 from the Ebola virus in West Africa in 2018 did not constitute a “triggering event.” The bond’s fine print said that the virus did not spread fast enough to earn pandemic status.
Then along comes COVID-19 and the house finally gets blackjack, but not before investors walked away from the table with $96 million in interest payments. Okay class, get out your calculator. If we take $96,000,000 and divide by 150,000 dead, we get …
After years of globetrotting, Todd J. Broadman finds himself writing from his perch on the Palouse and loving the view. His policy briefs can be found at US Resist News: https://www.usresistnews.org/