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"Although it's very risky capital, hopefully it won't be wasted," he said.
Moreover, Morgan Stanley's push into wealth management is still a work in progress, he noted, and the firm is still heavily reliant on more risky capital markets activity.
Risky capital from banks may be the only kind they can get.This danger will be especially great in the poorest, worst-governed countries.
Policymakers in rich countries could tax risky capital flows at their point of departure, even as policymakers in emerging markets taxed them at their point of arrival.
So, startup investors who are comfortable with making a risky capital bet are actively encouraging startups to go after large, static industries that look primed for disruption.
And now that they can recruit as many students as they wish, many universities are spending increasing amounts on marketing and on risky capital projects that they hope will give them an edge over competitors.
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Think of device companies as risky, capital-intensive hardware plays.
Indeed, investors will only purchase riskier capital notes at significantly higher interest rates, and these higher rates (the cost of capital) will impose a strong market discipline on risky merchant banks.
This led to Manila and its metropolitan region to be ranked as the second riskiest capital (city) to live in according to Swiss Re.
In an environment with uncertain inflation a nominal FRM has a risky real capital value, whereas an ARM has a stable real capital value but short-term variability in required real payments.
"Even very risky human capital is more bondlike than stocklike," Mr. Gordon said.
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