Dear Prof.Rutledge, dear Prof. Raynes, ..., you distinguish value creation and optimization.This distinction is important indeed, I may ask you to let me know, where this critical distinction is expanded and profounded ( literature, artcles etc). Yours sincerely, Hubert Gantz WP.u.StB. /CPA

Dear Mr. Gantz, First, let me thank you very much for your question and apologize for taking so long to respond. I will first quote from the book so that the context of your query is clear to other readers: "Optimization increases average wealth by redistributing the margins of risk and return locally; value creation  increases total wealth," Raynes & Rutledge, The Analysis of Structured Securities, OUP 2003, p. 92. Optimization is a financial rearrangement that produces more bang for the buck.

Naked Capitalism's Yves Smith makes a compelling case for the need for structural reform. She is spot-on about the significance of disintermediation for the banking industry and the need to decouple risk. Her lament—"I see perilous little grappling with the problem that [Bank of England's...

It wasn't Dr. Krugman's hate-mail treatment of securitization that made my brain go tilt.(I say this even though we concur with Barry Ritholz’s reasoning in his blog article, "Paul Krugman is Wrong About Securitization." )What really got to me was the reference to toaster...

An article by Anousha Sakoui and Nicole Bullock in Financial Times entitled "Liquidation risk grows as DIP finance dries up" is one more piece of evidence that hybrid systems don't work. I'm referring here to the two corporate bankruptcy systems the U.S. has put in place:...

In her article on the RGE Monitor Web site, R&R's Ann Rutledge discusses two myths that she sees offered as fact in a recent position paper by the Financial Economists Roundtable, "Reforming the Role of the Statistical Ratings Organizations in the Securitization Process." Myth 1:...

Recently the Financial Economists Roundtable (FER) posted a summary of their thinking in July 2008 on Reforming the Role of Statistical Rating Organizations [SROs] in the Securitization Process. The FER is a group of senior financial economists who advance the study of finance and frame...