All the activity described, from catastrophe bonds to the securitization and off-loading of coastal mortgage debt, was legal. CAT bonds, for example, driven by investors seeking higher yields following decades of low interest rates, were triggered by a few very expensive disasters, which has led to a panicked sell-off. It is not a Ponzi scheme described by leftist pundits, but a standard insurance bet gone wrong in an era of climatological extremes. Wall Street’s creation of financial products to insure against climate risk had the effect of spreading it to every part of the system.
