Defaults on loans are weighted to sector , have a small idiosyncratic weight and a lot more are systemic. Under macro stress defaults rise by 2-3X over a 12 -24 month cycle. This is inherent in TradFi as leverage is basic in fractional reserve banking and 'blows' up. Watch the US defaults into 2024 Q2 and lets see
One of the reasons 'insuring' credit defaults needs substantial capital and ability to recoup
Defaults on loans are weighted to sector , have a small idiosyncratic weight and a lot more are systemic. Under macro stress defaults rise by 2-3X over a 12 -24 month cycle. This is inherent in TradFi as leverage is basic in fractional reserve banking and 'blows' up. Watch the US defaults into 2024 Q2 and lets see
One of the reasons 'insuring' credit defaults needs substantial capital and ability to recoup