Wackynomics

Life Insurance 

There are many forms of life insurance. Here are a few popular types: 

Whole Life--One version provides coverage in case you die from an overdose of natural grain bread or cereal. A lesser-known variant pays $1 billion to any NFL running back who is accidentally killed while moving the ball exactly nine yards. Other versions of whole life cover lethal collisions with enchiladas, balls of wax, and magillas. 

Hole Life--This is an obscure, cheap form of insurance that pays off only if you die from specific causes. To collect, you must choke to death on a the center of a donut; fall into a sewer or mine shaft; collapse after hitting a hole-in-one; expire from Swiss cheese poisoning; get your head stuck in a wheelbarrow tire; and so forth. 

Term Insurance--One form covers politicians while in office; when they are voted out or impeached, they can convert it to Vatical Insurance. 

Full Term--a policy that, for a mere $100 in premium, insures a pregnant woman for $10 million but pays off only if she can prove she carried her baby for exactly 38 weeks 3 minutes and 11 seconds from the moment of conception. 

Terminal Insurance--Covers one's demise after becoming hysterical over losing one's luggage in an airport. Berkshire Hathaway, Warren Buffet’s conglomerate, sells this coverage through a network of property and casualty agents. BH also owns a luggage company, so he makes money no matter what. 

Vatical Insurance--Life after death insurance issued by the Pope, underwritten by the Vatican, and administered by nuns in a French convent who say the rosary thrice daily to save souls from burning in hell. Since no policyholder has ever called from the other side to report, some conjecture that this coverage may not be cost-effective. 

Universal Insurance--there are several forms: 

1. Universal Life Insurance (UL)—also known as Everlasting Life, this is the holy grail of life insurers, the super Holstein of corporate cash cows. UL policyholders believe they will live forever, so they allow insurers to bill them for eternity, and never pay out a death benefit. 

2. Universal Appeal Insurance (UA)—one of the most lucrative of financial service products, UA insures articles everyone loves: the Swiss Alps, pizza, hot dates and quick-loss diets.Some INCOs worry about huge claims losses if everyone on earth were to suddenly stop watching the ultra-popular infomercials they underwrite. 

3. Universal Joint Insurance (UJ)—this covers contortionists; and death due to explosion of automotive transmissions and similar mechanisms. Sometimes confused with Universal Joint Life Insurance, which provides coverage to the owners of low rent diners, strip bars and tattoo parlors. 

4. Universal Solvent Insurance (US)—this could be a great product for insurers, if only they could write a policy.Originally designed to insure death by drowning in any and every body of water on earth when H2O was incorrectly thought to be the universal solvent. Had to be re-evaluated when insurers realized that a universal solvent would dissolve its own container. 

5. Universal Serial Bus Insurance (USB)--a low premium, high value policy with rigorous underwriting requirements. Only individuals who are entirely compatible and interchangeable with every other human on the planet are eligible. 

6. Universal Truth Insurance (UT)--Also know as Failure To Pay. Protects against the universal truth of insurance: that no matter how great your policy is, whatever happens, you're not insured for it. UT is insurance on insurance, or lack thereof, or what shoulda been but ain't. You figure it out. 

Single Pay Life Insurance--modestly priced temporary coverage available at refreshment counters and coat rooms at opera houses. It is bought chiefly by nervous people who have been warned that it really is over when the fat lady sings.

Risk 

Official definition: Uncertainty of a financial loss. 

Real meaning: Judging from how palatial insurance buildings dominate the skylines of most cities in America, there is absolutely no uncertainty. The odds of an insurance company sustaining a loss are about the same as sighting an aircraft carrier in Montana. 

Pure & Speculative Risk

Official definition: Insurance companies say they insure only pure risks, which solely involve the chance of loss. Speculative risks, that involve the chance for loss or gain--as in betting on a stock or a horse race--are not insurable.

Real meaning: Yeah, right. If they insured only losers, how could they make money? Everything is insurable. Insurers must speculate. 

Insurers hate risk, so they spread it, like pudding on a dance floor, until everyone slips on it. But no matter how far you smear it, it's still pudding and it’s still a mess. One can imagine an insurance risk spreader’s duties. It surely is a highly coveted upper-management job. He or she walks around the countryside spreading risk, perhaps by pushing one of those garden gadgets that broadcast seeds, or they spew it from a crop duster all over Des Moines and Pensacola. 

Pretty soon, there's risk here, there and everywhere--everywhere except, of course, in the insurance company's back yard. Later, like some somnambulant mutant giant Brussels sprout, or a fourteen-armed pox-laden droid from a sci-fi movie, risk wakes from its sleep, and attacks a village in a hurricane or buries a mountain condo community in a mudslide. 

When I get life insurance, my risk gets spread to someone else, right? That worries me. The poor schmucks who get stuck with my risk--the riskees or spreadees, take your pick—what about them? Do they get a vote? Will the spreadees get nervous with me, the riskor, what with all that peril hanging over their heads, and come and kill me? Does taking out life insurance seal my coffin? If life insurance were eliminated, would the homicide rate drop? Just knowing that some guy's out there gunning for me--I'm canceling my policy first thing in the morning. And I'll demand the insurance company send a certified letter telling him or her—the spreadee/riskee—they're off the hook, so they disarm the time bomb hidden somewhere on my car.

Cars and risk, how does that work? Spreading risk, it seems, is like a bookie laying off a big bet on a hundred-to-one long shot. If the bookie can’t balance the giant wager with bets on the favorites, and the long shot wins, he’s wiped out. Say BIG FRED Insurance Company covers a huge fleet of long shot cars—a few thousand Beemers and Lexi and Mercedes convertibles owned by an oil sheik—and BF can’t lay off the bet because all its cash cow Buicks and winter beaters switch to GLIECO at once. The next day, every bored teenager in the sheikdom, looking for a new thrill, crashes into one another in a Middle Eastern version of demolition derby, and BIG FRED is toast. Scary to ponder, if you're a pushing a risk spreader down the boulevard. 

Elasticity of Demand  

Official Definition: When the price of a good rises, consumers buy less, and if it costs less, they buy more. Price elasticity of demand measures the responsiveness of a change in quantity demanded for a good or service to a change in price. 

PEoD theory works like this: if the Home Shopping Network offers $1000 vacuum cleaners for ten bucks, ladies will swoon and buy them in truckload quantities, because vacuums are loveable and their prices are elastic, even if vacuums themselves are quite rigid. If HSN prices the same vacuum at $5000, viewers will laugh, because no vacuum is that charming, even those that suck up bowling balls or create fascinating little dust tornadoes in their handles. 

So far so good. If, on the other hand (price elasticians seem to have several hands) HSN reduces roofing nails from $1 to 10 cents a pound, shoppers will not buy more nails. They’ll switch to QVC because it has more exciting products. Therefore, nails are price inelastic (and ugly, too). 

Economists thus can “prove” that rigid vacuums are elastic and rigid nails are inelastic. If economists were physicists objects in motion would be at rest. If they were meteorologists, it would be 116 and snowing in Phoenix at the same time. Psychiatrists, of course, would see no contradiction and diagnose all these situations as cases of multiple personality disorder. 

What about rubber bands, which ARE elastic, especially if they're picked when they’re ripe. Can they be inelastic? According to economists, yes, because no one buys more of them when their price goes down, nor fewer when their price rises. That’s a safe bet: when was the last there was a run on rubber bands and bungee cords? 

So to an economist rubber bands are inelastic elastics. Sort of like weightless cement or Cambodian Swiss cheese. 

Bars are very inelastic: try slamming a shot glass on one some time and see how much bounce back you get. Yet, the more bars there are, the more people drink, which would imply an elasticity of demand. To further confuse the matter, when a solid mahogany bar is moved from a rundown neighborhood saloon to a Tony uptown watering hole, the price of a cocktail goes way up, again hinting at the elasticity of something, even if it's merely drinkers’ tolerance to outrageous bar tabs. 

Today there are 1000 times more talking heads on radio and TV than a generation ago. They blab about everything—sports, politics, OJ Simpson, religion, global warming, Brittany Spears, even economics. To the dismal scientists (that’s what REAL scientists call economists), their explosion in numbers, according to PEoD, could never have occurred without a dramatic drop in prices, but that’s not what happened. These personalities are raking it in, big time, not buying gas a gallon at a time to get them to their next payday. Is Rush Limbaugh flying coach? Does Chris Matthews order off the McDonald’s dollar menu? Is Bill O’Reilly clipping pork and bean coupons? 

To be fair to economic theory, some articles are price-insensitive and behave according to supply-demand forces no matter what. When cheap slaves were recruited to build the extremely inelastic Egyptian pyramids, the prices of these structures plummeted. One would have predicted every two-bit Pharaoh in the realm fabricating them en mass, and pyramid developments sprouting everywhere. But only three of consequence were ever constructed, demonstrating that cheap doesn’t necessarily put folks in a buying mood.

Bonds  

A financial instrument named for Commander Bond (pronounced bawhnd). James Bond, the sophisticated M16 British bon vivant spy who effortlessly offs bad guys, skillfully operates every machine ever invented and woos gorgeous superachieving women merely by leaning elegantly against a bar. 

James Bond's cunning, stealth, audacity, killer sophistication, and the fact that he looks great in a tuxedo, make him and his daring deeds the ideal icon for anyone in need of a dignified place place to stash their loot, whether ill- or legally gotten. Hence, James Bond is the boring Wall Street bond writ exciting. 

A bond is technically a loan to a company or city or country whereby an investor (a) earns interest and (b) appears to be as sophisticated as rich investors from the Hamptons or Palm Beach or Sausalito who dabble in these financial instruments. 

How does buying a bond and lending money to Big Deal, Inc. or Uzbekistan or Gary, Indiana, differ from forking over a few thousand bucks to your brother-in-law Ralph so he can buy a new lawn tractor or start a sticky bun franchise? It doesn't. In fact, Ralph might actually repay you as agreed. 

Types of Bonds 

Junk Bonds--these are really risky places to put one's money: 
Chinese Junk Bonds--worthless instruments that either finance the building of 2nd century sailing vessels for which there is no demand; or toxic toys, medicines and food the evil makers of which James Bond will liquidate in his next movie, Leadfinger. 

Junque Bonds--the sale of these enable the French military to buy white flags, tanks that travel only in reverse, and weasel farms. 

Zero Bonds--One version does not actually exist so it pays no interest because it invests in nothing. Another version finances the production of retro Japanese fighter aircraft. 

Junque Zero Zero Chinese Junk--a hybrid, this sure loser combines every bad feature known in investment circles. It finances the conversion of 2nd century lead hull sailing vessels into aircraft carriers for use by extinct Japanese war planes flown by French aviators. 

Bearer Bonds--There are several versions of these, which are used to run nontraditional schools for: 
1. Himalayan sherpa guides, and safari porters who carry bwana's elephant guns.
2. little boys who march down church aisles balancing a ring on a pillow without tripping on the runner.
3. people who have the grave responsibility of conveying unpleasant news, such as repo men, skip tracers and periodontists. 

Muni (Municipal Bond)--named after the Greek letter mu, meaning micro, which is the interest rate these bonds offer. The financial playground of the VERY wealthy because they are not taxed like most investments, munis finance the building of high-minded projects like schools and roads. Unfortunately, they also bankroll messy ventures like sewers and supermax prisons, which are never discussed in polite company at the country club. 

Assets 
An asset is anything desirable you posses that someone will scam from you if they can figure out a way, or punish you if they can't. 
There are two classes of assets: stealable, and enviable .
Money, a cool car or a gorgeous spouse are stealable assets that someone has in their crosshairs and wants to relieve you of and make part of their portfolio. If you possess enviable assets--you're a size four, have a corner office, beautiful kids, all your hair, can make love seven times a night and still get to work on time, have nary a blade of crabgrass on your lawn or can unclog a toilet using only chop sticks--an inevitable someone somewhere, jealous of your prowess, is right now plotting to kill, maim or disgrace you. 

Portfolio 
A group of ceaselessly fluctuating assets that collectively render you wealthy, famous, powerful and beautiful at best; or destitute, obscure, nasty and unpopular at worst. 
One's portfolio is associated with one's net worth, and can swing wildly in value overnight. For example, a homeless man might invent a quick-loss diet plan that instantly propels him to fame, fortune, an appearance on Oprah and a portfolio of interest to every Wall Street financier. Or, a rich and famous celebrity may get drunk and slug a cop and go to jail and wind up homeless. Then, his or her portfolio is about as valuable as a wedding gown at a nudist colony. 


CD 
Certificate of Destitution. You put money in a bank at a measly rate of interest and leave it there while inflation eats away at its value and the government taxes it. Eventually, it becomes worthless. 



Mutual Fund 
A baffling financial leap of faith where an investor sends money to a faceless, silver tongued, outrageously overpaid manager who places it into a pot along with similar money from other clueless investors. The fund is like a stew: it has a fancy, seductive name and a zillion mysterious ingredients swimming in a strange broth called "Small/Midcap Equity" or "Balanced Income." No one but the cook knows what's in it, how it was made, and when it will be "done" and tasty or go moldy and rotten. One day the stew is rich and creamy and savory and smells magnifico, and is valued at 10.654, whatever that means, but it makes you happy. A month later it turns green and reeks like a dirty jock strap, and at 6.943 makes you sad and has you considering buying an AK-47. 

Hedge Fund 
A tub of money and assets even more shadowy and mysterious than it's black sheep relative, the mutual fund. Wealthy investors turn vast sums of money they can afford to lose over to an even more outrageously overpaid manager who does anything he wants with it as long as he makes gobs more money, or they'll kill him. 

Interest 
A heads-they-win, tails-you-lose financial prison sentence meted out by banks and imposed on nearly everyone. Here's how the interest sucker game works: 
You lend a loaf of bread to a well-fed banker friend, who promises to return it intact, plus interest--an extra slice--a year from now. Instead of eating it, he lends your loaf to a desperate starving family that agrees to return the loaf someday AND pay him much more interest--a slice a week for eternity. 
According to the Law of Vanishing Value, inflation eats away at the value of your extra slice, and the government taxes it, until it becomes a stale crumb that wouldn't feed a roach for a day. Meanwhile, the banker gets 52 slices a year, to feed himself in style or lend out to another desperate starving family. 

Accountant 
Any member of a strange secret cult who arranges numbers any way you want to get a result you desire and which satisfies another accountant. 
Apprentice accountants develop their special skills by first studying the culinary arts. They attend attend famous schools like Chez Enron and Maison d' Lehman and learn how to cook up sauces, soups and gravies--savory victuals whose ingredients can't be identified and whose method of preparation is mysterious, but smell real good. They must pass a rigorous test of gastronomical wizardry by preparing a rich and meaty Audit Stew using only a salami, ramen noodles and Cool Whip. Graduates are called CPAs (Certified Palm Artists and Alchemists). 

Ledger 
A person--often an investor or executive--who assumes the jump position on a ledge 40 stories up, when his or her lawyer, accountant or fund manager calls with some unpleasant news about their imminent arrest or bankruptcy. 


Shredding 
The act of carefully disposing of annoying documents that clutter offices and contain references to misunderstood hobbies like bribery, adultery, embezzlement, obstruction of justice and the like. Shredding is best conducted at 3 AM when interruptions and distractions are few, and innocent onlookers won't be injured. 

Broker 
1. (noun) A person who fixes something that ain't broke after they break it. For example, a broker may wreck a perfectly satisfactory mortgage and turn it into a loan from hell.
2. (adverb) what you become when the noun form of broker gets done with you.
3. (verb) To break something, as in "I'll broker the widget deal for you." 

Fiduciary (Fidooshiary) 
In ancient times, when a man went off to war to fight Gauls or Visigoths, he would entrust his affairs to a fidoosh--an individual of unquestioned loyalty and honesty and unimpeachable credentials. Now, individuals at Wachovia and Bear Stearns perform the same duties. 


Moody's 
A temperamental outfit given to fits of gloom, rage and depression one moment and episodes of delusional euphoria the next. One of the cops of Wall Street, Moody's petulantly reviews investments and decides whether a bond is a two thumbs up Grade A, like pasteurized milk, Grade B like a cheap cigar, or Junk, like...you know...junk. 
Moody's suffers from bipolar disease, aka manic-depressive disorder, so it's important to know if it's in a state of ecstasy or despair when it downgrades Google or says "Morgan Stanley looks like a winner to us!" 

Standard & Poor's 
A financial services company that makes standard investors poor. It purportedly renders independent and unbiased opinions on the solvency and financial well being, or lack thereof, of businesses and investments. It has two service or quality levels, standard and poor. Tipsy dart players are familiar with the precision of the advice afforded at the "Standard" service tier. Wasted dart players understand what "Poor" investment guidance means.