Can someone explain why Credit Default Swaps are still legal? Gambling is outlawed in most states - but, the guys with all of the money can bet on the collapse of our economy (and everything else) legally - why?

Read the articles below -- it's still going on today - and we're in for the same result - but, this time could just totally wipe us out.

Wake up people - Healthcare and Global Warming aren't the biggest issues -- they won't matter if your dollar isn't worth anything.

Swap reform's time has come

By MarketWatch
Mar 10, 2010 10:41:00 (ET)

NEW YORK (MarketWatch) -- Obscured from the public view through their complex structures, regulators are finally shedding much needed light on credit swaps, those financial instruments that allow investors to bet against underlying securities such as mortgages or sovereign debt.

The illumination is long overdue.

Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission and Angela Merkel, Germany's prime minister, are taking aim at the swaps market following news that banks made speculative bets against Grecian debt. Both leaders are talking about new restrictions on the practice, according to a report in The Wall Street Journal.

Swaps have the potential not only to bring about a systemic collapse as evidenced by the massive losses at American International Group Inc but to fuel a self-fulfilling prophecy by creating downward pressure on the underlying securities.

The swap issue also goes to the heart of an underwriter's role in supporting an issue. Underwriters are required to provide potential investors with clear information about an issuer's ability to make good on its debt. At the very least, investors should be required to disclose whether they plan to bet against those securities and the size of those bets once they are made.

It's been nearly two years since Wall Street firms, notably Goldman Sachs Group Inc. bet against mortgage securities they helped underwrite. When Goldman's chief executive, Lloyd Blankfein, was questioned about the firm's tactics by the Financial Inquiry Commission in January, he drew the ire of the commission's chairman Phil Angelides.

"A little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars," Angelides said. "It doesn't seem to me that that's a practice that inspires confidence in the markets."

Without firm rules spelling out an issuer's responsibility, don't expect confidence to return anytime soon.

BY STEPHEN FIDLER, GREGORY ZUCKERMAN AND BRIAN BASKIN :

International momentum is building for stricter oversight of derivatives trading, as a top U.S. regulator recommended new limits on credit-default swaps and European leaders pushed for a ban on speculative bets against government debt following recent financial turmoil in Greece.

In the U.S., Commodity Futures Trading Commission Chairman Gary Gensler in a speech Tuesday offered his most-specific criticisms yet of credit-default swaps, the insurance-like contracts often blamed for the near-collapse of American International Group Inc. during the financial crisis.

He offered several recommendations to limit their use—though didn't go so far as to suggest a ban on speculative trading