Business Illusionist Donald Trump Perfect For President
The country is tired of Barack Obama and his unfulfilled campaign promises. Voters are equally unhappy with the Congress which is bickering over pennies when it’s Ben Franklin’s face on hundred dollar bills we need to be watching. Cutting off funding for free jazz and opera broadcasts on National Public Radio hardly seems the ticket out of our deficit problems yet that is what John Boehner is focusing on in the House these days.
As our country hurtles toward the possibility of bankruptcy, we need a man who understands the bankruptcy laws inside and out. We need a leader who has been to the brink or gone over the falls in his corporate barrel more times than you can think of. Enter Donald Trump. If practice makes perfect, who do you know who has filed for bankruptcy more times than Donald Trump’s businesses?
In the early 1990s Trump almost went over the cliff of personal bankruptcy. He advises in his books to never personally guarantee business loans and admitted he didn’t follow his own good advice. The country was in a downturn and was vastly overleveraged. He had also made the extreme error of personally guaranteeing his commercial real estate loans. He was quoted in 1997 in the New York Daily News that his personal wealth was about minus $900 million.
Over the decades, “the Donald,” as his former wife Ivana dubbed him some years back, has avoided personal bankruptcy by borrowing heavily from his very rich father and his siblings when there was no other option, and by playing brinkmanship very well. Even so, his companies have very publicly failed on many occasions.
In 1989, Trump bought the Eastern Airlines shuttle service from Eastern as it was trying to stave off its own collapse by selling off its better assets. He renamed it The Trump Shuttle and tried to class up the service and its image. The Eastern shuttle was an efficient service for business people to get back and forth from NY to Boston or D.C. Nobody cared if it was fancy inside the plane or not. It didn’t take much for the Trump Shuttle to fail in an economic downturn. It was loaded with way too much debt, a Trump hallmark. Rather rapidly, in September 1990, never having made a dime, the Citibank led group of 22 banks foreclosed on the Trump Shuttle’s $380 million loan. That was Trump’s first introduction to the bankruptcy courts but he’s been there several times since.
As the New York real estate market cratered, Trump was able to work his way out of his difficulties by 1. turning to his family for desperately needed cash, 2. convincing those who held his loans that they were more likely to recoup their money if they allowed him to stay involved in the workouts. He lost vast parts of his real estate empire along the way. Think the Plaza Hotel, the NYC Rail Yards (now the Riverside Complex) and other properties as well. He nonetheless carried on in a way that obscured this fact from the public, especially those outside New York City. New Yorkers could read about Donald’s travails in the NY Daily News if not elsewhere and knew then that he is really mostly bluster and bluff and lives a life as full of puff as his ridiculous hair do.
Bankruptcy laws were intended to allow companies to reorganize their businesses and keep going when debts overwhelm them. Sometimes there is a path to the future if given time and a better economy to bail you out. Bankruptcy usually results in the wiping away of considerable debt that can otherwise hobble a company. Debtholders often wind up with control of the company and stockholders are wiped out completely. Excessive debt makes it impossible to ever survive the rising interest costs you must pay once your debt becomes junk . It is hard to have any money left to remain competitive. On a smaller scale, think about your credit cards that started with low interest rates that zoomed to 30% during the recent banking crisis if you were late with a payment.
To Trump, bankruptcy is simply a useful “tool.” For sure, it works if you have no regard for your fellow shareholders who are pretty much wiped out in the bankruptcy process. In the case of his casinos, Trump has screwed his shareholders three consecutive times by wiping out their investment. If at first you don’t succeed, try, try again. In 1992, Trump Taj Mahal, Trump Castle and Trump Plaza had $1 billion in debt when the 1990-91 recession hit. This was simultaneous with the failure of the Trump Shuttle. The first go at Chapter 11 was in 1992 and Trump’s stake was reduced to 50% by the bondholders.
The second time around was in 2004 when Trump Marina, Trump Taj Mahal and Trump Plaza in Atlantic City filed for bankruptcy. In an interview with Neil Cavuto on Fox News, Trump said: “I don’t think it is a failure. It’s a success.” That time the debts totaled $1.8 billion. The third time, it was Trump Entertainment Resorts that filed for chapter 11. In an interview with Neil Cavuto that day,Trump bragged that “we have a lot of cash.” He also said that “bankruptcy is a tool. And you can use bankruptcy to your advantage.” The modus operandi was to reorganize, retain a huge salary and other payouts to himself, even if you still have a ton of debt so the company is likely doomed to go down yet again. The last time, he and his daughter simply quit the week the company went bust so he could say he no longer had a role in the company and even though it had his name on it.
If, like the Donald, you are used to being involved in defaults in the billions, one surmises it would be easy an easy transition to the concept of owing trillions as the United States has now done. George W. Bush pushed us off that ledge of a balanced budget when he came into office in 2001. Now, it seems, there is no turning back. It’s quite amazing to think how low we have sunk in only a decade. In the midst of this, the current ill regarded Congress, with an approval rating lower than President Obama’s’ is fittingly focusing on National Public Radio and the small dollars we spend on making classical music, jazz and opera available to the masses who can’t afford $100 tickets to walk into live performances.
For Trump, the U.S. presidential race, must be amazingly enticing as a self promotional tool and a way to further aggrandize his limitless ego. It’s a free national platform with zero cost advertising. Forget the recently reported facts that only once in the last number of decades has Trump bothered to vote in a primary since 1989, according to the New York Board of Elections records. He hasn’t always voted in regular elections either.
When you are a publicity hound to promote your other business activities, just having your name in the papers is reward enough. It embellishes your brand. It garners viewers for your The Apprentice shows. It drives even more tourists to New York to have their photographs taken in front of Trump Tower on Fifth Avenue and emailing them home via their cell phones. Maybe one of them will decide to buy an apartment from someone to whom Mr. Trump has licensed his name.
At some point Trump will have to get off the Obama birther flap now that the President Obama has published the long form of his certificate of live birth. He must move onto important issues that voters want addressed. That has to be really challenging for a man with little apparent substance or interest in policy matters. Not only has Trump embellished his net worth over time but also his veracity has been called into question regarding even the height of his buildings and the number of floors they contain. This was highlighted in New York magazine in 2001.
Remember that to run for public office, you must reveal your personal finances. Since Trump is quite vested in embellishing his net worth at every possible opportunity, his jig would be up rather quickly. In 2009, Trump sued a reporter at the New York Times who wrote that in reality he was at best a millionaire, but surely not a billionaire no matter where he showed up in the Forbes 400 list. The N.J. Judge, Michelle J. Fox, threw the case out of her court.
While Trump isn’t quite as bad as Newt Gingrich in his marital infidelity record, he did have an open affair with Marla Maples, 17 years his junior, that resulted in his nasty divorce from Ivana Trump. (Ivana was famously quoted as saying: “Don’t get mad. Get Everything.” She left their marriage with an estate in Westchester, $10 million in cash which the Donald had to borrow from friends and family to pay her off, and reportedly 49% of the Mar-A-Lago estate in Palm Beach, Fla, but Donald denies that he had to go hat in hand. Ivana also got a nice set of alimony and child support payments to keep her going in the future. Maples had already given birth to their daughter, Tiffany, two months before she and Donald finally got married in 1993. The marriage went through five postponements as he insisted on a “pre-nup” as described in the People magazine article linked above. She left with only $2 million. He’s now married to Melania Knauss, who is 24 years his junior and he has one son with her named Barron born March 20, 2006.
P.T. Barnum had nothing on Donald Trump. In fact, we could argue that beyond being a promoter of the first order, Trump missed his true calling. It isn’t rendering business advice on TV. It isn’t building tall, gaudy buildings that will far outlast him. It isn’t being a circus barker as Barack Obama called him recently in the flap about Obama’s live birth certificate. Trump really is an illusionist when it comes to his net worth, just like the man behind the curtain in the Wizard of Oz.
Also implicit in seeking public office is to engage the voters, kiss babies, and shake hands with your adoring public. However, Trump is an admitted “germophobe.” He cannot shake hands with others. How do you run for office that way? If he does, Purell, the maker of hand sanitizers, is going to love this man!