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Gambling is a feature of capitalism—not a bug | Prospect Magazine

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"The case of Carlill vs Carbolic Smoke Ball Company and the concept of insurable interest became important again when the Credit Default Swap was invented in the 1990s. This is a security which commits the institution underwriting the ‘swap’ to make a payment in the event of default on a specified loan. If you, as the purchaser of a CDS, had made the loan yourself, you were buying insurance. If you hadn’t—a ‘naked’ swap—you were simply betting that the borrower would fail to repay. "

Gambling is a feature of capitalism—not a bug | Prospect Magazine

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