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Trump Doesn't Divest Because He Can't Afford To


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Up To His Eyeballs In Hock Including The Chinese Communist Bank


Josh Marshall from Talking Points Memo has an interesting proposition. Perhaps the reasons Trump refuses to release his tax returns and is so intractable about fully and completely divesting himself from his various business interests is because he actually can’t without the entire house of cards crashing down around him.



Maybe he can't divest because he's too underwater to do so or more likely he's too dependent on current and expanding cash flow to divest or even turn the reins over to someone else.


Late this afternoon we got news that Trump will remain as executive producer of The Apprentice, now starring Arnold Schwarzenegger. That is, quite simply, weird. The presidency is time consuming and complicated, even for the lazier presidents. Does Trump really need to do this? Can he do it, just in terms of hours in the day? Of course, it may simply be a title that entitles him to draw a check. But does he need the check that bad?


The idea that Trump is heavily leveraged and reliant on on-going cash flow to keep his business empire from coming apart and collapsing into bankruptcy was frequently discussed during the campaign. But it's gotten pretty little attention since he was elected.


Josh of course is largely speculating because Trump has been hiding all this information from the public, but much of what he says makes sense.


Josh points out the fairly interesting fact that was revealed after Trump started rage-tweeting about the case of the new Air Force One from Boeing that hasn’t even been ordered yet, which is that Donald Trump sold all of his stock in order to avoid potential conflicts of interest.​


So, if he knows he’d have a conflict of interest with owning stock in a company like Boeing — when for example as President-elect when he goes on a twitter rampage that has the potential to trash Boeing’s stock — that he knowingly sold all his stock ahead of time, then he actually does know what a “conflict of interest” is and he does understand that he needs to fully divest to avoid exactly that kind of conflict, why doesn’t he do that with his other 500 companies too?


According to his spokesman, Trump sold all of his stock back in June, a portfolio which his disclosures suggest was worth as much as $38 million. Trump told MattLauer that he sold the stock because he was confident he'd win and "would have a tremendous ... conflict of interest owning all of these different companies" while serving as President.


Perhaps it’s because he can’t afford to, particularly after he lost $50 Million by forgiving the money he loaned his own campaign in the exact same month that he sold all his stock.


Now Marshall’s theory is based on the idea that Trump isn’t nearly as rich, and his companies are nearly as solvent as they seem with heavy debt load highly leveraged so that they have to keep expanding and generating new revenue to pay for all the old enterprises that aren’t paying for themselves. Some confirmation of this recently came from a former Apprentice producer who says that Trump’s real estate business was in shambles until he began starring the program.


But consider this. During the primaries Donald Trump loaned his campaign roughly $50 million. Over the course of the spring, as it became increasingly likely he'd be the nominee, that loan became increasingly conspicuous. Donors were wary of donating big money because they didn't want him to use it to pay himself back for that loan. Many suggested that he might not actually be able to part with that money. It became a big issue and Trump refused to forgive the loans


It was only in June that Trump finally gave in and forgave the loan; this was confirmedin the June FEC disclosure that came out in late July. Who knows why Trump sold off all his stock holdings? Maybe he just had a feeling. Maybe he thought the market was too hot. Maybe he just had a spasm of prospective ethical concern. But let's be honest. The most obvious explanation is that forgiving that debt from his campaign required him — through whatever mix of contingencies — to free up more cash, either for the campaign or personal expenses or perhaps to have a certain amount of cash on hand because of terms of other debts. It does not seem plausible at all that the timing is coincidental.


Bill Pruitt, who also worked on “The Amazing Race” and “Deadliest Catch,” said Trump’s real estate empire was crumbling when he was cast as the star of NBC’s reality show, which redeemed him as a famous and successful businessman,


“‘The Apprentice’ was a scam put forth to the public in exchange for ratings,” Pruitt said. “We were ‘entertaining,’ and the story about Donald Trump and his stature fell into some bizarre public record as ‘truth.'”

Their scam was so successful that it eventually got Trump all the way to the White House, although the president-elect has already signaled he doesn’t really want to live there and would prefer to stay in the Manhattan apartment building with his name on it.


So it may be the Trump decided to do The Apprentice because he had to in order to maintain his cash flow and help burnish the value of his brand. Ever since his New Jersey Casino bankruptcies he hasn’t really built any new properties other than golf courses, instead he’s mostly licensed his name onto properties built by other people.


He’s also been unable to secure loans from U.S. banks who no longer trust him and has instead looked overseas to line his pockets with cash, including a $650 Million loan from the Bank of China and Goldman Sachs, and a $364 Million loan from Deutsche Bank.


That’s over a $1 Billion in debt — that we know about --- while Forbes estimates Trump’s net worth at about $3.7 Billion.


A softening of New York City’s real estate market, particularly in retail and office, where valuations are trending down, has diminished his estimated net worth. New information was also a factor. Of the 28 assets or asset classes scrutinized by FORBES, 18 declined in value, including his trademark Trump Tower on Manhattan’s Fifth Avenue, his downtown jewel 40 Wall Street and Mar-a-Lago, his private beachfront club in Palm Beach.


According to Forbes for example the value of Trump Tower went down by $159 Million in 2015, his property Avenue of America’s in New York went down $62 Million. Considering how toxic the Trump brand became during the course of his campaign these values may have cratered again in 2016 pushing Trump’s outstanding debt to potentially be greater than the value of all his assets.

Here’s what a corporate lawyer had to say about Josh’s suggestion.


I don't think liquidity concerns at the companies would, by themselves, prevent him from selling (liquidity would become the buyer's problem). But I do agree that his June stock sale suggests his companies are highly leveraged and that he doesn't have much free cash personally. Credit agreements typically require the borrowing company to use its available cash to pay interest and/or repay debt, and prevent dividends to shareholders if the dividends would exceed a particular amount or cause the company to fail some financial metric (usually based on available cash or shareholders' equity). Those restrictions normally are a lot less significant where the borrowing company has solid cash flow and/or does not have a lot of debt.


It may be that the sweet spot for Trump to sell would be during the first year of his administration
, when the values of his businesses have inflated due to some combination of his policies and the association with him, and a buyer could reasonably benefit from the association with him for at least three years.
He could pass it off as trying to put the conflict behind him.
Look for the buyer to get a right to continue to use his name -- and perhaps other rights/promises that we'll never know about. I wouldn't expect all of the deal documents to be made public.


In other words, he can’t divest now because he’s waiting for the sellers market to be in his favor and get the biggest bang for his buck which is exactly the moral fiber you want in a President. And it appears that even barring that possibility Trump’s people are trying to carve out a ethics loophole that would allow Trump, his kids and his cabinet members to all retain ownership of their companies and have a third party -- in a totally not-blind trust -- manage them in the meantime. Never mind existing ethics rules or the Emolument’s clause.


Donald Trump’s aides have met with officials at the Office of Government Ethics to discuss the use of a “discretionary trust” that would allow officials in the next administration to continue to draw income from their businesses,



Under the “discretionary trust” model, assets that pose a potential conflict of interest are held in a trust, often overseen by a family member, and are no longer considered to belong to the elected official at all. This arrangement allows those assets to continue to produce income for the official, and it also makes no specific prohibition on the official discussing the financial holdings with the trustee.


This type of arrangement, which seems consistent with what Trump has been claiming he would do with his own businesses and have his children run them, would allow the Trump organization to keep making money and continue servicing their enormous $1 Billion plus debt load, because he has to. Fat chance that the OGE goes along with that idea.


The Office of Government Ethics, which is responsible for ensuring executive branch personnel don’t run afoul of conflict of interest laws, has been pressuring Trump to place his fortune in a blind trust, like virtually every president before him. But Trump has thus far refused — and in his Wednesday tweetstorm, he purposefully did
say he plans on actually divesting from his own company.


That omission was not lost on whomever manages the OGE’s official Twitter account. Shortly after Trump’s announcement, the OGE shot off a series of tweets mock-congratulating Trump for putting his conflicts of interest to rest by divesting from his company, which Trump
very much did not do.


It also would continue to leave Trump himself vulnerable to pressure from the Bank of China, Goldman Sachs, Deutsche Bank and others who could easily threaten to call in his debts or raise his interest rates — or like Turkey who seems to be blackmailing Trump by jailing one of his business associates — if he doesn’t give them whatever they or their governments feel like demanding from him.


Or it would allow people like his chosen Secretary of State Rex Tillerson who still owns $177 Million with of Exxon stock which would massively increase in value if the $500 Billion oil project he personally brokered with Russia finally goes through with the lifting of sanctiona on Russia over their annexation of Crimea.


Now it wouldn’t be a problem if Tillerson sold his stock, except that he can't.


In theory, the shares could be sold and invested in Treasury bills or mutual funds. That would address obvious conflicts of interest that might arise over diplomatic moves that benefit Exxon.


The problem is that 1.9 million shares held by Tillerson, worth over $177 million, were not vested at the end of 2015. And they’re not scheduled to vest for years.


That’s by design, a corporate pay policy intended to encourage Exxon leaders to take a long-term view, similar to the time horizons that many investors have. The board wanted to extend the execs’ compensation well into retirement.


So whether those sanctions are lifted or not still would have an massive impact on Tillerson’s bottom line, maybe not as much as diplomats being enticed and/or pressured into staying at Trump’s DC hotel, but still an impact.


Either way, Trump keeps making money, and our Democracy remains on the sales floor to the highest bidder.

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Up To His Eyeballs In Hock Including The Chinese Communist Bank


Josh Marshall from Talking Points Memo has an interesting proposition. Perhaps the reasons Trump refuses to release his tax returns and is so intractable about fully and completely divesting himself from his various business interests is because he actually can’t without the entire house of cards crashing down around him.

Never heard of Josh Marshall before you spammed here.


With that in brain I'm going to add I wasn't for Trump winning the primary and he did anyway and now that he is elected President I am going to remind myself, he is a mascot of societal evolution in character but a sole result of ancestry in person.


I resemble many kinds of stereotypical characters defined by reality, but in this real moment, I am one of a kind as equally displaced as anything anywhere in this universal moment.

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I resemble many kinds of stereotypical characters defined by reality, but in this real moment, I am one of a kind as equally displaced as anything anywhere in this universal moment.


You most seem to resemble a stereotypical mumbling street lunatic, actually.

What is the difference between a universal moment and an ordinary moment? Are there even any moments possible that are not situated in a universe?

What do you mean by "equally displaced"? Is it possible to be unequally displaced? Who displaced you? The ones with The Voices you hear, or was itr a case of autodisplacement?


What was your place before the displacement? We all know what a place mat is, but is there such a thing as a displacement mat?

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Trump lies and manipulates stupid people. We all saw that with his year long birther act, which was nothing but a very obvious ploy to attract daily attention to himself. He lies about building projects which bear his name to gain investors, but in which he has invested not a cent. He lied about his bogus "University" and the "experts" he hired for its faculty,and by the way, we have heard that he AGREED to pay $25 million to make the fraud case go away, but we have heard nary a word if any of this money has yet been paid.


He surely has lied about his finances. It seems highly probable that his taxes are NOT being audited. It seems that he will NEVER produce his tax forms. And he cannot do business as usual and serve as president without major conflicts of interest, accusations of insider trading and worse.


Trump is quite clearly a phony. How big a phony he is is the only question.














What we see 6AwL60uh.jpgwith Trump is not what we get.

Here is what we ought to see.

This is what we got.

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