A large chunk of the 'money' involved in the present financial crisis relates to Credit Default Swaps - CDS, as distinct from Derivatives in general. They are a process whereby people can bet on the credit position of any debtor. A buyer pays a premium to a seller who agrees to pay out if a 'credit event' occurs (default, re-structuring, bankruptcy etc). The buyer may have a connection with the debtor, or not. These transactions were not sanctioned by any government or central bank in the world, they simply arose as an arrangement between private individuals or organisations. Consequently they were not officially regulated. They are not traded on an exchange and have no duty of reporting to any official agency. They are the likely cause of the present financial crisis. They can be divided into two classes. A, where there is some relationship between the buyer and the debtor and B, where there is no relationship. Case A, where there is effectively an insurable interest, is most like Insurance. Case B, is effectively gambling. As we know, both insurance and gambling are both heavily regulated worldwide and, consequently, well defined. How is it that financial organisations can voluntarily create these two forms of business, insurance and gambling, with nobody batting an eyelid and without paying appropriate duties to the government of jurisdiction? Insurance - A promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance Companies are licensed, regulated and required to maintain reserves to cover their liabilities. CDS traders are not! Gambling - To bet on an uncertain outcome. It seems almost obvious that people who were conducting such transactions were breaking the law? Why were they not prosecuted? The estimated value of CDS's in the market today is about $25 trillion, half the worlds GDP and at least 80 times the size of the global narcotics trade. Quite a lot wouldn't you say? And all effectively illegal? The whole global derivatives market is 20 times the size of the world economy. The European parliament managed to recognise their existence in 2004 and bring them within regulation, which UK did in 2006. Presumably USA has done to? But their form and rules have never been defined by legislation. Definitely the tail wagging the dog! These instruments, along with other derivatives are what enables the markets to wage war on banking, business and governments and consumers and taxpayers will end up picking up the tab. We should demand effective control! Would this be worthy of a template letter to everyone's MP and MEP demanding appropriate legislation?