Sun, 11 Jul 2004
I must remember that digital cameras -- especially pocket snapshotty-things -- have significant shutter lag. I don't get to go to air shows often enough to justify buying a real camera and a telephoto Lens of Doom, which is why this shot of the RAF's Battle of Britain Memorial Flight (Spitfire, Hurricane, and Lancaster seen in close formation) is a bit grainy and, well, crap. But we had a good time yesterday at the annual air show at the National Museum of Flight at East Fortune, getting re-acquainted with the sound of fast jets on afterburner and gaping at the exotics (the only F-86A Sabre flying in Europe! The only airworthy Sea Vixen in the world!), and the Red Arrows were their usual inhumanly precise selves. I was interested to see a WWII re-enactment society at the show. I wonder how long it'll be until we see a Cold War re-enactment society? [ Discuss Cold War ] posted at: 12:54 | path: /toys | permanent link to this entry The Guardian runs a fascinating expose of the death broking business -- an example of risk management strategies run amok. Death broking - or gambling on the lifespan of your fellow man - has become the latest way for investors tired of stocks and shares to reap a healthy profit. Individual investors are making enormous returns by buying so-called impaired life insurance policies auctioned at a discount by terminally ill policyholders, desperate to unlock the benefits of their policies before they die. 'I prefer buying the policies of people who have certain sorts of cancer because, with the right sort of research, you can pinpoint fairly accurately how long they have left to live,' said 49-year-old Robin Harley. ... 'If people have money to invest, they become very cold about how they do it: it becomes an entirely commercial decision,' [said an anonymous FSA]. 'I have hesitations about individuals getting involved in this market because unscrupulous people purchasing policies from people who are quite vulnerable could easily abuse that position,' he added. Kennedy admits this could be the case. Sometimes, however, the seller can triumph over the buyer ... 'We pulled out of this market altogether because we found the sellers were not dying when they were supposed to, and we were having to face huge numbers of disgruntled buyers,' [another FSA] admitted. (My emphasis.) Now, let's see if I've got this right ... A life insurance policy is basically a bet you make (with the insurance company) that you're not going to die. You owe them a chunk of money (with interest) which you normally pay in installments, monthly. If you die, they owe your estate their side of the bet. There are complications -- normally life policies pay off when they mature as well as when you die -- but it's basically a bet. And in this case, a transferrable bet. If you want to get into the death broking business, you pay out a substantial chunk of the maturation value of the policy -- typically 30-40% -- to the policy-holder, in return for which you inherit the policy. You keep paying the installments until the terminally-ill former policy-holder dies, at which point you receive the full balance of the policy, thus making a return of maybe 20-40% per annum on your investment. (If their cancer doesn't go into remission, of course.) Which leads me to ask several questions. Can we conceive of trading forward death options to hedge ourselves against the risk of declining mortality among AIDS victims? Can we conceive of large-scale manipulation of this market? Is it possible that a burgeoning death broking business might lead some larger investors to attempt to stifle medical research into cures for commonly fatal conditions? And how do we deal with the equivalent of the free rider problem -- the free killer problem (wherein the equivalent of Murder, Inc. decides to get heavily into impaired life policies and then liquidates its investment, so to speak)? The mind boggles (in between reaching for the sick bucket). I swear I couldn't make anything like this up and hope to get away with it in fiction. What, I wonder, would Adam Smith think? [Link] [Discuss market anomalies] posted at: 12:01 | path: /weird | permanent link to this entry |
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