
Originally Posted by
Melonie
^^^ now recalculate your $400 example for a $300 recovery which is more typical for a bailout scenario ...
1) Senior Debt $190 (loss of 5%)
2) Junior Debt $90 (loss of 10%)
3) Preferred / Warrants $30 (loss of 40%)
4) common stock $0 (loss of 100%)
If you now consider that the 10% loss suffered by the uber-rich can be applied dollar for dollar against other capital gains, their aggregate 'loss' is probably on the order of 7-8%. On the other hand, the losses for Joe Sixpack common stock holder are worse than 100%, since Joe not only took a total loss on his common stock shares but will also be paying higher taxes to finance the bailout ... which effectively reduced Mr. Uber-Rich's pre-tax loss from 85% to 10% but did nothing to mitigate Joe's own losses.
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