> Why should it be legal to make billions of dollars in profit off of the failure of something? The money they made was not in any way extracted from anybody c

> Why should it be legal to make billions of dollars in profit off of the failure of something? The money they made was not in any way extracted from anybody connected to the malls. Imagine sitting on earth with a friend, observing the Death Star through a radiotelescope. You bet the friend $1000 that the Death Star will vaporize Alderaan. You have made $1000 off the event, even though nobody in the Empire or on Alderaan even knew you and your Friend existed, or had any economic involvement in your transaction (and, in fact, given the distance, the event happened before the transaction even took place). > How does that make economic sense? In a larger sense, any transaction where you can bet on the success or failure of particular economic endeavours allows an individual investor to fine tune their portfolio to their dreams or concerns (e.g. if you own a skyscraper in a coastal city and are worried about Kaiju, being able to buy Kaiju insurance helps you sleep soundly at night). Collectively for the economy, such transactions are beneficial, because in their aggregate, they can be a more efficient resource allocation mechanism than a central planning mechanism. > These guys walk off with a huge bag of cash, a bunch of investors that were trying to invest positively get screwed, the mall dies None of which was the hedge fund's doing, see above. > and all that money and economic opportunity vanishes. Analyses like yours often fail to consider what happens with the "huge bag of cash" you mention above: It has just been transferred from the pockets of one investor group to the pockets of another investor group who have arguably demonstrated that they better understand how money is productively spent. So the money is not only going back into the economy, but may well be employed more efficiently.