Dan Ivascyn

And higher costs.

And higher costs to service that debt.

So any type of

growth shock with inflation remaining elevated would be a far worse scenario for credit.

We're not forecasting that.

So the point we are simply trying to make here is that what used to be a unlevered 8% return with very few realized losses, especially given how aggressive lending got coming out of the COVID period.

Those were really bad vintages where spreads were super tight and

because of this battle for market share, you just weren't getting good protective terms on your debt.

So those types of segments of the economy that were used to having losses close to zero are likely going to have a period where those losses end up migrating up to the mid single digits.

So that old 8% type return that you were getting,

back when high quality bonds were returning one or two, is probably gonna be four or 5% for a while.

Probably with four or 5% today is, I can buy an Australian government bond, I get that too, but I could buy, you know, finally I could buy a treasury bond at four and a half.

That's great.

So I like to differentiate when I have a

when I'm reflecting a PIMCO view versus a personal view.

So this is an area where we have a little bit of difference of opinion.

Of course, we have Rich Claret, the former vice chair of the Fed.

He's done his share of speeches and things.

Great speeches.

Let me just say this.