- Aug 8, 2016
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This is basically the same scheme as weather derivatives. With weather derivatives you can bet against the weather and basically laugh all the way to the bank while bankrupting your enemy. Good financial instrument to have around, especially if you can control the weather.
Anyway. Here's a snip. Article's kind of long, so.
In June 2017, the World Bank announced the creation of “specialized bonds” that would be used to fund the previously created Pandemic Emergency Financing Facility (PEF) in the event of an officially-recognized (i.e. WHO-recognized) pandemic.
They were essentially sold under the premise that those who invested in the bonds would lose their money if any of six deadly pandemics hit, including coronavirus. Yet, if a pandemic did not occur before the bonds mature on July 15, 2020, investors would receive what they had originally paid for the bonds back in addition to interest and premium payments on those bonds that they recieve between the date of purchase and the bond’s maturation date. The PEF, which these pandemic bonds fund, was created by the World Bank “to channel surge funding to developing countries facing the risk of a pandemic” and the creation of these so-called “pandemic bonds” was intended to transfer pandemic risk in low-income countries to global financial markets. According to a World Bank press release on the launch of the bonds, WHO backed the World Bank’s initiative.
However, there is much more to these “pandemic bonds” than meets the eye. For example, PEF has a “unique financing structure [that] combines funding from the bonds issued today with over-the-counter derivatives that transfer pandemic outbreak risk to derivative counterparties.” The World Bank asserted that this structure was used in order “to attract a wider, more diverse set of investors.”
Critics, however, have called the unnecessarily convoluted system “World-Bank-enabled looting” that enriches intermediaries and investors instead of the funds intended targets, in this case low-income countries struggling to fight a pandemic. These critics have asked why not merely give these funds to a body like the Contingency Fund for Emergencies at the World Health Organization (WHO), where the funds could go directly to affected countries in need.
Some analysts have argued that these pandemic bonds were never intended to aid low-income pandemic-stricken countries, but instead to enrich Wall Street investors. For instance, American economic forecaster Martin Armstrong has called the World Bank’s pandemic bonds “a giant gamble in the global financial casino” and a “scheme like no other,” recently arguing that these bonds could present a “a structured derivative time bomb” that could upend financial markets if a pandemic is declared by WHO. Armstrong went on to say that it is in WHO’s interest to declare the coronavirus outbreak a pandemic, but noted that, in doing so, they would cause bondholders to take significant losses.
Continued - Is Wall Street Behind The Delay In Declaring The Covid-19 Outbreak A "Pandemic"?
Anyway. Here's a snip. Article's kind of long, so.
In June 2017, the World Bank announced the creation of “specialized bonds” that would be used to fund the previously created Pandemic Emergency Financing Facility (PEF) in the event of an officially-recognized (i.e. WHO-recognized) pandemic.
They were essentially sold under the premise that those who invested in the bonds would lose their money if any of six deadly pandemics hit, including coronavirus. Yet, if a pandemic did not occur before the bonds mature on July 15, 2020, investors would receive what they had originally paid for the bonds back in addition to interest and premium payments on those bonds that they recieve between the date of purchase and the bond’s maturation date. The PEF, which these pandemic bonds fund, was created by the World Bank “to channel surge funding to developing countries facing the risk of a pandemic” and the creation of these so-called “pandemic bonds” was intended to transfer pandemic risk in low-income countries to global financial markets. According to a World Bank press release on the launch of the bonds, WHO backed the World Bank’s initiative.
However, there is much more to these “pandemic bonds” than meets the eye. For example, PEF has a “unique financing structure [that] combines funding from the bonds issued today with over-the-counter derivatives that transfer pandemic outbreak risk to derivative counterparties.” The World Bank asserted that this structure was used in order “to attract a wider, more diverse set of investors.”
Critics, however, have called the unnecessarily convoluted system “World-Bank-enabled looting” that enriches intermediaries and investors instead of the funds intended targets, in this case low-income countries struggling to fight a pandemic. These critics have asked why not merely give these funds to a body like the Contingency Fund for Emergencies at the World Health Organization (WHO), where the funds could go directly to affected countries in need.
Some analysts have argued that these pandemic bonds were never intended to aid low-income pandemic-stricken countries, but instead to enrich Wall Street investors. For instance, American economic forecaster Martin Armstrong has called the World Bank’s pandemic bonds “a giant gamble in the global financial casino” and a “scheme like no other,” recently arguing that these bonds could present a “a structured derivative time bomb” that could upend financial markets if a pandemic is declared by WHO. Armstrong went on to say that it is in WHO’s interest to declare the coronavirus outbreak a pandemic, but noted that, in doing so, they would cause bondholders to take significant losses.
Continued - Is Wall Street Behind The Delay In Declaring The Covid-19 Outbreak A "Pandemic"?
