But I think you get a sense of what's happening.

Maybe I can get 20 a year.

And what is required is a combination of physical capital, institutional capital, human capital and security, of course, is critical, but so is information.

That assets, A for assets, is equal to

But we'll do a whole playlist on that.

Moody's, were willing to give AAA ratings to more and more, what I would argue, are risky loans.

And then on the equity side, because we have no liability, so in this case assets will be equal to equity.

Let's say today, I could give you 100 and that you could invest it at 5 risk free.

less capital intensive that there's less money that's required

And if everything was equal, if these companies really were equal, in terms of their capital structure, in terms of how much debt they had, in terms of their growth rate, in terms of their risk, in terms of the markets they operate in, in terms of who are their customers, and how much of a competitive advantage they have.

It should start to make a little bit of intuitive sense

The nature of the risk and our ability to respond to the risk is much greater in the case of the scenario that might involve

I'll do that in yellow.

One, what shares are share of

Japanese friends are very risk Averse.

liabilities plus equity.

Essentially when the market price of my asset dropped, all of that value came out of my equity.

I use 100 gold pieces.

And then the equity is, essentially we would look at this formula.

In a world without leverage so if I didn't have all this

So this is just another visual representation that

It doesn't sound like we borrowed money or anything.

Good health is his capital.

liabilities.

Type of risk

So now it's getting interesting.

But let's say its assets are worth 1 million.

In return on equity, the numerator is the net income that we got, so it's 350,000.

Capitalist country.

So he owns it outright so all of the 100,000 of asset value is actually his equity.

I'll give you two examples.

So let me do that in a vibrant color.

That's 11,000.

Let me do equity in a different color.

It's all his equity.

Well, I have 250,000 left over.

Risk

is

Risk

I'm now supporting Stewart's position, softly, from a risk management standpoint, agreeing that the risks of overheating the planet outweigh the risk of nuclear incident, which certainly is possible and is a very real problem.

So then the perceived risk goes down, of lending.

Remember liabilities plus equities are equal to assets.

How much equity do they have?

It's high risk, extremely high risk.

My liabilities would be 145,000.