the thinking is that 20 cents on the dollar of deposits are mandated to be held in government bonds.
the ten year yield increased from 6.4 to 7.8 year over year leaving mark to market losses of -16% plus credit going south at a rate of at least 10% (non performers) and that in a best case
the capital choice side of it is that say at an 8% yield capital doubles in less than a decade without risk
and that risk can be measured by earnings (flat) and the multiplier (expanded from 22-27 on flat earnings)
at an 8 % yield the fair value multiplier is 12.5 (1/8*100). add a 25 % premium for novelty and it should be roughly 16
the ten year yield increased from 6.4 to 7.8 year over year leaving mark to market losses of -16% plus credit going south at a rate of at least 10% (non performers) and that in a best case
the capital choice side of it is that say at an 8% yield capital doubles in less than a decade without risk
and that risk can be measured by earnings (flat) and the multiplier (expanded from 22-27 on flat earnings)
at an 8 % yield the fair value multiplier is 12.5 (1/8*100). add a 25 % premium for novelty and it should be roughly 16
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