Imagine the household of John & Jane Doe with 28k in their checking account and an annual pre-tax gross income of 125k. For the sake of argument, assume they have some of the world’s craftiest accountants, meaning their yearly tax and accounting bill combined is only about 15k. Throw in 45k of living expenses (like food, insurance, cars, etc…), and this leaves the Doe’s with 65k in disposable income. It sounds great so far, but we haven’t considered their debts (like credit cards, student loans, auto loans, mortgage, etc…) nor the interest on those debts. Unfortunately for John & Jane, they are about 2 million in debt. Fortunately, that debt is financed at a meager rate of 1.35%. So the total interest they paid last year was only 27k (.0135 x 2 million). This left them 38k of disposable income, hardly enough to put a dent in what they owe.
Hum? I hope they get screwed, however they will take us all down - to big to fail - so on second thought, not so sure. Hum!
I wonder how much they all borrowed combined to buy their own stock back?