Comments on: Securitizing death http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/ by Ramesh Narayanaswamy Tue, 06 Jan 2009 02:24:19 +0000 http://wordpress.org/?v=2.6.5 By: Ramesh http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2439 Ramesh Thu, 09 Aug 2007 08:47:05 +0000 http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2439 The Bihar racket if true is outrageous, no doubt. But coming back to our securitization of death, it seems to be that those of us in close proximity to the investment banking profession would tend to side with Wall Street--call it intertia if you will. It'd be interesting to see what "normal" people, if I may, would think of this. The CFO epitomizes the sentiment outside Wall Street. There is no question that both parties benefit: this question would not have arisen if we were talking about mortgage securitization. But when one talks of life and death, one cannot ignore the emotional repurcussions. That's where the catch lies. (I like that: the Magic of the Macro. Hehe!) The Bihar racket if true is outrageous, no doubt.

But coming back to our securitization of death, it seems to be that those of us in close proximity to the investment banking profession would tend to side with Wall Street–call it intertia if you will. It’d be interesting to see what “normal” people, if I may, would think of this. The CFO epitomizes the sentiment outside Wall Street.

There is no question that both parties benefit: this question would not have arisen if we were talking about mortgage securitization. But when one talks of life and death, one cannot ignore the emotional repurcussions. That’s where the catch lies.

(I like that: the Magic of the Macro. Hehe!)

]]> By: Vivek Sonny Abraham http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2438 Vivek Sonny Abraham Wed, 08 Aug 2007 18:45:30 +0000 http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2438 I agree with Hari: the dead dude is getting his insurance no matter what. Its not like bought the parties want the chap to die :) One of them will have obviously makes a notional gain if the person in question lives. You can't feel sorry for this chap. You can't compare it with this guy in Bihar, who used to insure other people's lives, without telling them and kill them and collect the benefits. That is pure evil. (I don't know if this is true though, its just hearsay.) Anyway, your description of the i-banking profession is quite accurate ;) especially with the Magic of the Macro! :) I agree with Hari: the dead dude is getting his insurance no matter what. Its not like bought the parties want the chap to die :) One of them will have obviously makes a notional gain if the person in question lives. You can’t feel sorry for this chap.

You can’t compare it with this guy in Bihar, who used to insure other people’s lives, without telling them and kill them and collect the benefits. That is pure evil. (I don’t know if this is true though, its just hearsay.)

Anyway, your description of the i-banking profession is quite accurate ;) especially with the Magic of the Macro! :)

]]> By: Ramesh http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2437 Ramesh Wed, 08 Aug 2007 17:22:31 +0000 http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2437 Agreed, the benefits are mutual. But the question is not so much about utility as it is about morality. But, as far as I can read him, what prompted the CFO to comment thus was the fact that the securitized instruments could then be traded in the market freely. It is one thing to have a mutually agreed contract between two parties, but I guess it is a slightly different matter to quote a price for someone's death and buy and sell it like a commodity. Heck if you have a hundred such contracts, you're literally investing in a graveyard. It is similar to the question whether voluntary euthanasia is right or wrong. Agreed, the benefits are mutual. But the question is not so much about utility as it is about morality. But, as far as I can read him, what prompted the CFO to comment thus was the fact that the securitized instruments could then be traded in the market freely. It is one thing to have a mutually agreed contract between two parties, but I guess it is a slightly different matter to quote a price for someone’s death and buy and sell it like a commodity. Heck if you have a hundred such contracts, you’re literally investing in a graveyard.

It is similar to the question whether voluntary euthanasia is right or wrong.

]]> By: Rachit http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2436 Rachit Wed, 08 Aug 2007 17:05:11 +0000 http://www.rnspeak.org/Weblog/2007/08/08/securitizing-death/#comment-2436 I was having this discussion abt insurance securitization and reverse mortgages with Hari. Finally it boils down to the point that both parties benefit, and mutually agree to the transaction without anyone forcing them to. So it is a legitimate and, can I say, ethical transaction (?). The only bet that the ibank is making is on the life expectancy. Now should one make money out of betting on how long the other guy is gonna live sounds bad, but it is still benefiting the other guy today, right? What say? I was having this discussion abt insurance securitization and reverse mortgages with Hari. Finally it boils down to the point that both parties benefit, and mutually agree to the transaction without anyone forcing them to. So it is a legitimate and, can I say, ethical transaction (?). The only bet that the ibank is making is on the life expectancy. Now should one make money out of betting on how long the other guy is gonna live sounds bad, but it is still benefiting the other guy today, right? What say?

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