Customer Reviews

Merton Miller on Derivatives (Wiley Investment)

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This collection of speeches from the early/mid 1990s would be more correctly titled "Merton Miller on Regulation." Some of the speeches indeed cover the regulation of the derivatives markets. The speeches make for good reading, but this book is not a reference work for one's library. Good speeches must be relatively simple and entertaining. These are. But one should not expect a rigorous investigation of regulation (nor of derivatives regulation) in this book. The advertising on this book is misleading. This is not a book written by Merton Miller. It is a good collection of speeches given by him.

This book was very dissapointing to me. I consider myself well read but a novice at derivatives. This is a book of speeches made by its author and is focussed on making the point that derivatives are a cheap insurance tool for certain situations and like all tools can be misused. There is the usual polemics of why a mandarinate government like Japan cannot manage a twenty first century country and why China should reject this form of development. I found the book lacking in rigor, insight and relatively low on substance. This book compares roughly to a sunday newspaper article from a not very good newspaper.

I agree with vcpnttp@aol: "a collection of speechs ....comparable to a sunday newspaper article". Each chapter was breezy and easy to read. But I completely disagree with vcpnttp's conclusion. Miller is obviously brillant and knows derivatives well. Miller's view is of the forest, not the trees. There are too many techno-nerdy how-to books on swaps; this was a refreshing, insightful read. His understanding of the regulatory environment you'll find nowhere else. I only wish the speeches were as current as the publication date, most were from 1994 or earlier.

I'm writing software for a commodity swap dealer. This is a great read.

Merton Miller, who died in 2001, was an outstanding figure in modern economics. He was one of three financial economists to win the Nobel Prize for Economics in 1990, in his case for his work on the capital structure of corporations - a field that, with his associate Franco Modigliani, he revolutionised if not invented. His great insight was that the value of a company, other things being equal, is invariant with regard to the mix of debt and equity that makes up its capital structure - or, to invoke one of Miller's own picturesque analogies, if I take a dollar out of my right pocket and put it into my left pocket, I am no better off.

This book is a collection of speeches given by Miller in the early to mid-1990s, largely covering the subjects of the derivatives revolution, regulation and corporate governance. The subject matter sounds dry; the speeches are anything but. Miller's jokes are exceptionally good - he has great sport in particular by satirising the convoluted German system of corporate cross-shareholdings, and reflecting ruefully on the inevitable question that is always posed to professional economists ('what will happen to interest rates?' - to which the only sensible answer is 'they will fluctuate'). But underlying the wit and engaging manner is a serious and profound point. Modern finance consists principally in the management of risk. Derivatives perform an exceptionally valuable function in a modern, complex economy by enabling economic agents to accomplish this end. Ill-conceived regulation can do harm by making it impossible for corporations to manage their business risk efficiently; this will have significant economic cost, with no compensating social benefit.

Many collections of speeches are testament merely to an author's vanity, and do not last beyond the occasions for which the speeches were written. This one is different: it is the fruit of an extraordinary intellect, a fine prose style, and a formidable technical expertise. It deserves to last, and is much to be recommended.

Accidently I met this book on the lecture-the one about the risk management.I guess Merton Miller is a great story teller. And most of them are full of wisdom and financial philosophy. The M&M theory is one of the milestone in the finance which does intrigue a lot of work about Leveage buyout,coporate governace,etc. This one also contains a lecture he gave in the Royal Swedish Academy of Sciences in Stockholm for his Noble prize winning.The one is titled "Leverage". I guess I am moved

and totally.....Mr. Miller has many greatest students,as you know,the one is Fama, another great scholar in the finance society.This book is a collection of his lectures he gave before.Unfortunately, Mr. Miller died in June,2000.So this one seems turn out to be the last fine words he gives us.