Financial Darwinism – Create Value or Self–Destruct in a World of Risk

<p>Foreword ix</p>
<p>Preface xv</p>
<p>Acknowledgments xix</p>
<p>CHAPTER 1 Understanding and Navigating the Financial Revolution 1</p>
<p>Introduction: The Need for Transformational Thinking 1</p>
<p>From George Bailey to the Golden Age 5</p>
<p>Accounting for Profits the Old–Fashioned Way 7</p>
<p>The Great Moderation As an Evolutionary Catalyst 11</p>
<p>Economic Performance in the Dynamic New World 14</p>
<p>Pressures on Static Business Models 18</p>
<p>Dynamic Finance Perspective on Financial Crises 21</p>
<p>Pillars of Strategic Decision Making 25</p>
<p>Value Creation Through Dynamism and Business Model Transformations 26</p>
<p>Beyond the Facade: The Importance of Risk–Based Transparency 35</p>
<p>CHAPTER 2 The Old Regime and Its Demise 39</p>
<p>Economic Performance and Viability of Financial Institutions 39</p>
<p>Static Business Models 41</p>
<p>Dominant Forces: The Future that Has Already Happened 46</p>
<p>Pressures on Static Business Models 55</p>
<p>CHAPTER 3 The Dynamic New World 65</p>
<p>Risk–Based Economic Performance 65</p>
<p>Balance Sheet Arbitrage 68</p>
<p>Principal Investments 69</p>
<p>Systematic Risk Exposures 71</p>
<p>Fees and Expenses 74</p>
<p>Capital Structure Optimization 75</p>
<p>Economic Performance Attribution 75</p>
<p>CHAPTER 4 Business Model Transformations 79</p>
<p>Pillars of Strategic Decisions in a Dynamic World 79</p>
<p>Responsive Recalibrations of Business Models 81</p>
<p>Full–Scale Business Model Transformations 86</p>
<p>Making the Strategic Vision a Reality 93</p>
<p>CHAPTER 5 The Road to Financial Darwinism 99</p>
<p>Real–World Business Model Transformations 99</p>
<p>Stakeholder Communication &amp; Equity Valuation in a Dynamic World 109</p>
<p>Economic Value Creation (and Destruction) by Non–Financial Corporations 112</p>
<p>The Infamous Carry Trade and the Old Ways of Thinking 115</p>
<p>A Dynamic Finance Perspective on Modern Financial Crises 118</p>
<p>Beyond the Facade: The Need for Risk–Based Transparency 127</p>
<p>Conclusion 129</p>
<p>Epilogue: Financial Darwinism and the Crisis of 2007 2008 133</p>
<p>Appendix A: The Risk–Based Economic Performance Equation 137</p>
<p>Appenidx B: A Case Study in Dynamic Finance 141</p>
<p>Notes 157</p>
<p>References 163</p>
<p>About the Author 167</p>
<p>Index 169</p>