The scientific triumphs of the modern world make it tempting to view ancient wisdom as obsolete and irrelevant. Moreover, as the pace of innovation has accelerated, the past horizon of what is to be viewed as ancient keeps shortening. In the world of capital market innovations, it now seems to have shrunk to about 20 years!
As the subprime collateralised debt obligation (CDO) crisis unfolded, I was struck yet again by the chasm that divides the two worlds of credit risk management. When I entered