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Cat Bonds
Posted: 23 Nov 2014, 10:19
by biffvernon
It takes a bit of effort to get one's head round how folk become rich from other folk's tragedies but Catastrophe Bonds are the latest trend in the financial gutter.
http://roadtoparis.info/2014/11/18/cat- ... tastrophe/
Posted: 23 Nov 2014, 22:17
by Tarrel
And there was I expecting a new feline spy thriller.
"My names is Bond, Cat Bond."
"You're a woman of many parts, Pussy."
Posted: 23 Nov 2014, 22:35
by Tarrel
On a more serious note, this is an example of what Jorgen Randers predicts in "2052". An increasing proportion of global wealth and output being syphoned out of the economy to be spent (or in this case, locked up) in climate change-related repair or mitigation costs.
I wonder if any of the Norwegian sovereign wealth fund is invested in such bonds? If so, one would have the slightly ironic situation of a major oil producer investing the spoils in dealing with the effects of burning that oil.
Posted: 24 Nov 2014, 08:30
by nexus
Well that's a depressing new low for a Monday morning....
Posted: 24 Nov 2014, 14:08
by kenneal - lagger
This is where a lot of the QE money must be going. The Stock Market and industrial shares aren't paying out much money because no one has money to buy much so money is being "invested" in bits of paper such as this. They obviously offer a greater return so investment into stuff that offers employment doesn't get made.
It's an ever decreasing downward spiral of less investment in work creation, less employment, less spending money, less employment ... . It signals the end of the industrial age, I think.
Posted: 24 Nov 2014, 14:30
by PS_RalphW
More people are 'employed' in the UK than ever before. However, it is almost all casual labour, and a lot lower money.
The top jobs are still there, and they are earning ever more with lower net taxes. The middle is being squeezed out of existence.
Anger is rising, but at the moment it is being cornered by UKIP into attacking migrant workers, who generally are very hard working and often better qualified than the people they displace from the job market. And the migrant's hard work goes straight into the pockets of the leaders of UKIP and their backers.
Insane, but it was ever thus,
Posted: 24 Nov 2014, 15:01
by raspberry-blower
kenneal - lagger wrote:This is where a lot of the QE money must be going. The Stock Market and industrial shares aren't paying out much money because no one has money to buy much so money is being "invested" in bits of paper such as this. They obviously offer a greater return so investment into stuff that offers employment doesn't get made.
It's an ever decreasing downward spiral of less investment in work creation, less employment, less spending money, less employment ... . It signals the end of the industrial age, I think.
Ken, what is actually happening is that corporations are, in fact,
buying back their shares at a record rate
This, at a time, when interest rates are at record lows. Economic growth, as we know it, is dead. Just don't expect this to be announced by the MSM anytime soon.
This Cat Bond is the latest in a line of highly suspect (read downright fraudulent) financial instruments that have come into being. When you need to cash it in it will be cashed at its true value - £0.00
It is not an investment, it is a scam
Posted: 24 Nov 2014, 15:19
by kenneal - lagger
I did write "invested".
Posted: 24 Nov 2014, 15:33
by 3rdRock
Cat bonds aren't a new scam. They've been around for nearly twenty years.
See:
http://en.wikipedia.org/wiki/Catastrophe_bond
Catastrophe bonds (also known as cat bonds) are risk-linked securities that transfer a specified set of risks from a sponsor to investors. They were created and first used in the mid-1990s in the aftermath of Hurricane Andrew and the Northridge earthquake.
Posted: 24 Nov 2014, 17:14
by biffvernon
Shortfall wrote:Cat bonds aren't a new scam. They've been around for nearly twenty years.
Indeed, as explained in the article at the top of this discussion:
After a puttering launch of the concept with $1-2 billion worth of cat bonds issued from 1998-2001, and a bit of a pick-up after 9/11 to $2 billion, after Hurricane Katrina, the market doubled to $4 billion. Last year it soared to $7.1 billion. This year, a surge of interest pushed issuance to double in the first quarter over the same period in 2013, to $1.2 billion, hit a record high of $3.5 billion in the second quarter, and quieted down somewhat in the third quarter. With three months left to go in 2014, some $6.6 billion has been issued this year. The market, worth $23 billion in as of October, has enjoyed annual growth of 25% for much of the last decade, compared with 10% for the rest of the insurance sector.
BNY Mellon, the Wall Street bank, has gushed that the sector has “huge potential”, predicting growth to $50 billion by 2018 as part of the larger insurance-linked securities (ILS) market that will climb to $150 billion. This compares favourably with the current estimated $215-220 billion size of the global reinsurance market.
Posted: 24 Nov 2014, 18:49
by 3rdRock
One thing's for sure - their greed knows no bounds.
"When morality comes up against profit, it is seldom that profit loses" - Shirley Chisholm
Posted: 25 Nov 2014, 11:09
by Tarrel
PS_RalphW wrote:More people are 'employed' in the UK than ever before. However, it is almost all casual labour, and a lot lower money.
The top jobs are still there, and they are earning ever more with lower net taxes. The middle is being squeezed out of existence.
Anger is rising, but at the moment it is being cornered by UKIP into attacking migrant workers, who generally are very hard working and often better qualified than the people they displace from the job market. And the migrant's hard work goes straight into the pockets of the leaders of UKIP and their backers.
Insane, but it was ever thus,
According to the FT, income tax receipts for the first half of this year have risen by only 0.1% compared with the same period last year. This despite "massive falls" in unemployment and a "best in the developed world" economic recovery.
The government continues to subsidise large corporations' payrolls through the benefits system, while making access to those benefits ever more draconian and continuing to borrow more.
Surely some mistake?