Table of Contents
Acknowledgements & Dedication v
Foreword vi
Part One: Past Successes and Disasters 1
1 Introduction 3
2 Pre-Modern Finance 17
3 Lessons from Past Financial Crises 33
Part Two: The Modern Financial Theory Engine 63
4 Theoretical Foundations of Modern Finance 65
5 Modern Financial Theory’s Hideous Flaws 87
6 Risk Management: Daft Theory, Dodgy Practice 111
Part Three: Interactions with the Real World 137
7 The Real World Becomes Modern Finance-friendly 139
8 Modern Finance Captures Wall Street 159
9 And Wall Street Metamorphoses 199
10 Derivatives and Other Disasters 225
Part Four: Policy Accommodates Modern Finance 245
11 Loose Money 247
12 Government Meddling in the Financial System 269
Part Five: Götterdämmerung 295
13 Bubble, Burst, and Panic 297
14 The Slope Down Which We’re Heading 331
Part Six: Charting a New Way Forward 349
15 The Math of Proper Risk Management 351
16 Back to the Future – A New Vision of Finance 373
17 A Blueprint for Reform 389
18 Lessons to Take Away 403
Bibliography 407
Index 413