Serious question: Why does Trump have money and expensive things?
May 23, 2019 3:14 PM Subscribe
If Trump has lost way more money than he has ever been given (by his dad or loaned by banks) or than he has earned, why does he have expensive stuff? Why isn't he poor? I don't get it!
We've learned in the past couple of years that Trump was given something like a half billion by his dad. We've also learned that he lost at least a billion over ten years from 85 to 94. During that period he was literally the worst business man in the entire country! We have no reason to think that any of his ventures have performed any better since then. On the NY Times Daily podcast this morning they talked at length about how no banks in NY will lend him money - except deutsche bank, and Trump has defaulted on loans from them, losing hundreds of millions of dollars (again).
My serious question is this: How do you lose money on every venture you've ever undertaken and still have a private plane, a Mara Lago, a 5th Ave penthouse, cars, clothes, etc? If all of this reporting is true, why does Trump have expensive stuff? If I got a half billion from my dad, then lost a full billion, I wouldn't have any stuff! Why does he have stuff?
I hope my question is clear. I'm genuinely wondering. I don't get it. Shouldn't he be poor?
We've learned in the past couple of years that Trump was given something like a half billion by his dad. We've also learned that he lost at least a billion over ten years from 85 to 94. During that period he was literally the worst business man in the entire country! We have no reason to think that any of his ventures have performed any better since then. On the NY Times Daily podcast this morning they talked at length about how no banks in NY will lend him money - except deutsche bank, and Trump has defaulted on loans from them, losing hundreds of millions of dollars (again).
My serious question is this: How do you lose money on every venture you've ever undertaken and still have a private plane, a Mara Lago, a 5th Ave penthouse, cars, clothes, etc? If all of this reporting is true, why does Trump have expensive stuff? If I got a half billion from my dad, then lost a full billion, I wouldn't have any stuff! Why does he have stuff?
I hope my question is clear. I'm genuinely wondering. I don't get it. Shouldn't he be poor?
If you have a business that is losing money then as long as you can find people willing to lend the business money and pay some of the interest on your loans you can still draw a salary or buy nice things. The bigger your business the bigger the scale of things you can buy. At some point the bill may come due, but if the bulk of your business is in real estate then you may be hoping that rising property values will allow you to either borrow more money in the future or that you can sell some of them to pay off part of the debt.
posted by any portmanteau in a storm at 3:28 PM on May 23, 2019 [13 favorites]
posted by any portmanteau in a storm at 3:28 PM on May 23, 2019 [13 favorites]
Money laundering. This is why Trump doesn't want to release his taxes or any business info, why he is fighting subpoenas of financial records, etc. Likely much of this occurred via Deutsche Bank, which has been fined for money laundering activities involving Russian entities.
For example, in 2008 Russian billionaire Dmitry Rybolovlev paid Trump $95 million for a property that Trump purchased in 2004 for about $41 million. Sound shady?
On preview, yes, tax shenanigans too, sure. But almost certainly there is criminality involved, which likely will come to light sooner or later. Hopefully sooner.
posted by number9dream at 3:32 PM on May 23, 2019 [22 favorites]
For example, in 2008 Russian billionaire Dmitry Rybolovlev paid Trump $95 million for a property that Trump purchased in 2004 for about $41 million. Sound shady?
On preview, yes, tax shenanigans too, sure. But almost certainly there is criminality involved, which likely will come to light sooner or later. Hopefully sooner.
posted by number9dream at 3:32 PM on May 23, 2019 [22 favorites]
Taxes work totally different from actual income.
For example, I have a rental property that I'm personally taxed on (its not in a corporate structure). Although I take in the rent, I can write off the mortgage, taxes, property management, HOA dues, etc... to the point where the only thing I have to claim is the actual revenue (profit-expenses, or cash flow).
A few years ago, I put in new carpet and paint. That is an improvement expense, but since you can only claim around $1000 per year, they let you claim the remainder in the following 2 years ($1K the first year, $1K the second and another $1K the third). This tax deduction (along with depreciation) has effectively reduced my tax burden on my cash flow to zero for the rental. So while I actually made money, I didn't may any taxes on that money. This is all legal (I have a trust-worthy accountant).
My understanding is that at the time the law allowed you to claim expenses for 10 years. So while he lost a billion dollars he can claim that loss over 10 years, effectively reducing his tax burden to zero (because a billion dollars can cover a lot of gain over 10 years). That, and I think there was some shady stuff going on in that the real estate loss was on the casino property (which I cannot believe was allowed, but I'm not too clear on the details).
But there's all sorts of ways to do this: celebrities (or politicians) that have 'charity foundations' that they are administrators of. Donations to the charity are tax deductible, but as administrator you can pay yourself whatever you want and buy things for yourself (private jet for the charity that you use) from the charity fund.
Money launderers used to get huge loans from the banks that were never intended to be paid off (which I assume you can write off?).
You can do stuff with real estate by value manipulation: sell something to someone under value, claim a loss, take the tax write off.
posted by kookywon at 3:42 PM on May 23, 2019
For example, I have a rental property that I'm personally taxed on (its not in a corporate structure). Although I take in the rent, I can write off the mortgage, taxes, property management, HOA dues, etc... to the point where the only thing I have to claim is the actual revenue (profit-expenses, or cash flow).
A few years ago, I put in new carpet and paint. That is an improvement expense, but since you can only claim around $1000 per year, they let you claim the remainder in the following 2 years ($1K the first year, $1K the second and another $1K the third). This tax deduction (along with depreciation) has effectively reduced my tax burden on my cash flow to zero for the rental. So while I actually made money, I didn't may any taxes on that money. This is all legal (I have a trust-worthy accountant).
My understanding is that at the time the law allowed you to claim expenses for 10 years. So while he lost a billion dollars he can claim that loss over 10 years, effectively reducing his tax burden to zero (because a billion dollars can cover a lot of gain over 10 years). That, and I think there was some shady stuff going on in that the real estate loss was on the casino property (which I cannot believe was allowed, but I'm not too clear on the details).
But there's all sorts of ways to do this: celebrities (or politicians) that have 'charity foundations' that they are administrators of. Donations to the charity are tax deductible, but as administrator you can pay yourself whatever you want and buy things for yourself (private jet for the charity that you use) from the charity fund.
Money launderers used to get huge loans from the banks that were never intended to be paid off (which I assume you can write off?).
You can do stuff with real estate by value manipulation: sell something to someone under value, claim a loss, take the tax write off.
posted by kookywon at 3:42 PM on May 23, 2019
My serious question is this: How do you lose money on every venture you've ever undertaken and still have a private plane, a Mara Lago, a 5th Ave penthouse, cars, clothes, etc? If all of this reporting is true, why does Trump have expensive stuff? If I got a half billion from my dad, then lost a full billion, I wouldn't have any stuff! Why does he have stuff?
The New York Times has some recent reporting on Trump and Deutsche Bank that is directly relevant to this question, including a podcast and this piece.
For instance:
posted by They sucked his brains out! at 3:42 PM on May 23, 2019 [2 favorites]
The New York Times has some recent reporting on Trump and Deutsche Bank that is directly relevant to this question, including a podcast and this piece.
For instance:
A provision in the [$500M Deutsche Bank] loan let Mr. Trump partially off the hook in the event of a “force majeure,” essentially an act of God, like a natural disaster. The former Federal Reserve chairman Alan Greenspan had called the financial crisis a tsunami. And what was a tsunami if not a natural disaster?Rinse, repeat, rubles.
One of Mr. Trump’s lawyers, Steven Schlesinger, told him the provision could be used against Deutsche Bank.
“It’s brilliant!” Mr. Schlesinger recalled Mr. Trump responding.
Days before the loan was due, Mr. Trump sued Deutsche Bank, citing the force majeure language and seeking $3 billion in damages. Deutsche Bank countersued and demanded payment of the $40 million that Mr. Trump had personally guaranteed.
posted by They sucked his brains out! at 3:42 PM on May 23, 2019 [2 favorites]
Trump makes a lot of money via his licensing deals (Trump steaks anyone?). Simply by putting his name on a golf course, bottle of vodka, tie made in China he can make millions. And since many of those deals are in foreign countries people have rightly questioned how those business relationships impact his foreign policy decisions - don't want to go hurting your brand now do you?
posted by brookeb at 3:52 PM on May 23, 2019
posted by brookeb at 3:52 PM on May 23, 2019
I come from a family of Brooklyn, NY bricklayers. One of my Grandpa's favorite stories was when he and the cousins were so happy because they were hired by the Trump corporation to work on several Trump properties. After a month, nobody had been paid and when speaking with the office, were informed there was a paperwork glitch but they would be paid in short time. More months pass, no money, but promises of bonuses. After a full year, it was clear Trump was not going to pay anyone. They spoke with other brickies and tradespeople and it turned out this was common. Trump didn't pay laborers and when they stepped up, he said their work was shoddy and he took them to court. So, that was a hard lesson learned.
In short, he doesn't pay his bills and threatens to sue if people demand payment.
posted by yes I said yes I will Yes at 3:54 PM on May 23, 2019 [24 favorites]
In short, he doesn't pay his bills and threatens to sue if people demand payment.
posted by yes I said yes I will Yes at 3:54 PM on May 23, 2019 [24 favorites]
When Trump's casino's went bust, he went back to the banks and said "I owe you a billion, but I'm broke. You lent me money on a dumb investment. How about I pay you back 100 million and you forgive me the rest?" The banks said okay. Then Trump said "Hey, the tax man wants me to pay taxes on the remaining debt I owe you. How about I give you a percentage of the future profits on those busted casinos and we can say I've paid you back everything?" The banks said "Future profits on your worthless business? Um... Whatever. It's no skin off our nose." Because you get a tax write off on debts you repay, Trump now basically had a billion dollars worth of future earnings he didn't have to pay taxes on.
How shady is it to pay off your debts with future profits on a business that's gone bust? About exactly as shady as you paying off your debts with a scribble you make on a piece of paper that you self proclaim is art worth a billion dollars. It's exactly as novel, and it's exactly that crazy. As far as we know, there's exactly one person in the history of debt repayment to pay off debt this way: Trump. If you're counting, that's nearly 2 billion Trump has just received for free, once as a bank loan, and once in future tax write offs.
Trump continued borrowing money. He did it by borrowing against his assets (stuff like Trump Tower) and hugely inflating their worth. Banks required no records from him and simply lent him the money. Trump continues to borrow, buy, inflate worth, ad infinitum tax free.
Another way that Trump made money was off interest. The same way you would on a bank account. Apparently, someone gave him about half a billion dollars to hold onto in a bank account, CD, or money market in his name and let him keep the interest, about 10%.
What is Trump's true net worth? Probably less than zero, because he holds tons of loser assets like his golf courses that actually lose money and are less than worthless. Of course, if you can go to a bank and claim they are worth a bazillion dollars and if no one does any checking to make sure those assets are actually worth anything, then you can simply keep borrowing bank money forever.
So, Trump makes money by borrowing it from banks by claiming he owns assets worth billions that are worthless, and has super secret sugar daddies who apparently give him money for no reason. The super secret sugar daddies are probably Russians who want him to move their money through his businesses to hide its origins and essentially wash it.
posted by xammerboy at 4:03 PM on May 23, 2019 [17 favorites]
How shady is it to pay off your debts with future profits on a business that's gone bust? About exactly as shady as you paying off your debts with a scribble you make on a piece of paper that you self proclaim is art worth a billion dollars. It's exactly as novel, and it's exactly that crazy. As far as we know, there's exactly one person in the history of debt repayment to pay off debt this way: Trump. If you're counting, that's nearly 2 billion Trump has just received for free, once as a bank loan, and once in future tax write offs.
Trump continued borrowing money. He did it by borrowing against his assets (stuff like Trump Tower) and hugely inflating their worth. Banks required no records from him and simply lent him the money. Trump continues to borrow, buy, inflate worth, ad infinitum tax free.
Another way that Trump made money was off interest. The same way you would on a bank account. Apparently, someone gave him about half a billion dollars to hold onto in a bank account, CD, or money market in his name and let him keep the interest, about 10%.
What is Trump's true net worth? Probably less than zero, because he holds tons of loser assets like his golf courses that actually lose money and are less than worthless. Of course, if you can go to a bank and claim they are worth a bazillion dollars and if no one does any checking to make sure those assets are actually worth anything, then you can simply keep borrowing bank money forever.
So, Trump makes money by borrowing it from banks by claiming he owns assets worth billions that are worthless, and has super secret sugar daddies who apparently give him money for no reason. The super secret sugar daddies are probably Russians who want him to move their money through his businesses to hide its origins and essentially wash it.
posted by xammerboy at 4:03 PM on May 23, 2019 [17 favorites]
He's in debt up to his eyeballs and also launders money.
posted by soren_lorensen at 4:05 PM on May 23, 2019 [5 favorites]
posted by soren_lorensen at 4:05 PM on May 23, 2019 [5 favorites]
If you have a business that is losing money then as long as you can find people willing to lend the business money and pay some of the interest on your loans you can still draw a salary or buy nice things. The bigger your business the bigger the scale of things you can buy.
This.
As long as you're worth money on paper (you've inherited money, you have a job with a salary, whatever) and can come up with some fairly minimal payments, corporations and people are willing to extend you all sorts of credit for getting more stuff. In the case of rich people, some of the "stuff" you can get is more credit.
There are thousands if not millions of ordinary folks in the US in all sorts of financial trouble with credit cards or home mortgages or car loans or etc etc etc because as long as they had some plausible income and minimal ability to pay their debts in theory, banks and credit card companies and car dealerships were willing to sell them stuff on credit. Trump is operating in the "millions and billions" territory rather than the "thousands" territory, so the stuff he can "buy" is gold-plated bathroom fixtures rather than vinyl siding, and it takes a lot longer for the whole financial house of cards to collapse.
And as J. Paul Getty supposedly said, "If you owe the bank $100 dollars, that's your problem; if you owe the bank $100 million, that's the bank's problem."
It's a matter of scale, really.
posted by soundguy99 at 4:46 PM on May 23, 2019 [6 favorites]
This.
As long as you're worth money on paper (you've inherited money, you have a job with a salary, whatever) and can come up with some fairly minimal payments, corporations and people are willing to extend you all sorts of credit for getting more stuff. In the case of rich people, some of the "stuff" you can get is more credit.
There are thousands if not millions of ordinary folks in the US in all sorts of financial trouble with credit cards or home mortgages or car loans or etc etc etc because as long as they had some plausible income and minimal ability to pay their debts in theory, banks and credit card companies and car dealerships were willing to sell them stuff on credit. Trump is operating in the "millions and billions" territory rather than the "thousands" territory, so the stuff he can "buy" is gold-plated bathroom fixtures rather than vinyl siding, and it takes a lot longer for the whole financial house of cards to collapse.
And as J. Paul Getty supposedly said, "If you owe the bank $100 dollars, that's your problem; if you owe the bank $100 million, that's the bank's problem."
It's a matter of scale, really.
posted by soundguy99 at 4:46 PM on May 23, 2019 [6 favorites]
J. Paul Getty is quoted as saying, "if you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem." Basically, the rules change when the amounts of money involved get really big. And the easiest way for the amounts of money to get really big is for them to have been big in the first place. Trump started out with a lot of money, which enabled him to be moving in high-income/high-debt circles. Maybe at certain times the debts outweigh the assets, but, hey, that's a problem for Future Trump (and for Future Deutsche Bank), as long as nobody ever actually asks him to cover those debts. For reasons which remain obscure (but will hopefully be at some point illuminated), Deutsche Bank continued to lend him money even after a default. Even by rich-people standards, their lack of any sort of common-sense oversight on the most recent few loans is pretty bizarre. However, notwithstanding that part, the willingness of banks to extend seemingly unlimited credit to "rich" people is basically what maintains them in the eternal (appearance of) great wealth.
This is mysterious because it's completely contrary to the experience of lower- to middle-class people. In most economic echelons of American society, your apparent wealth is more or less pegged to your actual wealth: credit cards won't sustain you too far before you go bust, and even a home loan typically requires you to have significant cash down. It's only when you get to the upper tiers of economic status in America that any given person might either be millions of dollars in the black or in the red and you can't tell which based on their lifestyle.
posted by jackbishop at 5:05 PM on May 23, 2019 [3 favorites]
This is mysterious because it's completely contrary to the experience of lower- to middle-class people. In most economic echelons of American society, your apparent wealth is more or less pegged to your actual wealth: credit cards won't sustain you too far before you go bust, and even a home loan typically requires you to have significant cash down. It's only when you get to the upper tiers of economic status in America that any given person might either be millions of dollars in the black or in the red and you can't tell which based on their lifestyle.
posted by jackbishop at 5:05 PM on May 23, 2019 [3 favorites]
(A followup story to the above: I live in an inexpensive city in a modest home and have no children. I'm an associate professor at a state university, which provides a salary which is neither princely nor miserly. Anyone looking at the way I live and the job I have can reach the conclusion that my means and my lifestyle are more-or-less in equilibrium. I have a friend who lives in a much more expensive area, with a much larger home, and has three children who are provided significant care and enrichment opportunities at no small expense. Both he and his wife are in significantly higher-paid professions than I am. Their cashflows—both in and out—are much larger than mine, and while I'm fairly certain they're doing well, the information I know about them is equally compatible with the conclusions "they're surviving and thriving and doing just fine" and "they're eyeball deep in debt and will be ruined any day now.")
Also relevant, tangentially: I'm reading David Copperfield, and notwithstanding Mr. Micawber's dictum that your expenses should not exceed your income, he invariably ignores this rule, and is sanguine and high-living until the exact moment he goes bust. So there's nothing new about living like you're rich until that final fatal day of reckoning; Dickens was lampooning it a century and a half ago.
posted by jackbishop at 5:28 PM on May 23, 2019 [1 favorite]
Also relevant, tangentially: I'm reading David Copperfield, and notwithstanding Mr. Micawber's dictum that your expenses should not exceed your income, he invariably ignores this rule, and is sanguine and high-living until the exact moment he goes bust. So there's nothing new about living like you're rich until that final fatal day of reckoning; Dickens was lampooning it a century and a half ago.
posted by jackbishop at 5:28 PM on May 23, 2019 [1 favorite]
Great answers above with good details, but the simple gist is: he’s a flim-flam man. He was given a bundle to start with and got very good at fleecing marks. He’s buffaloed and bamboozled a lot of successively bigger fish, and usually in the stories his character meets a very unpleasant end.
posted by SaltySalticid at 5:35 PM on May 23, 2019 [2 favorites]
posted by SaltySalticid at 5:35 PM on May 23, 2019 [2 favorites]
You might be interested in checking out The Millionaire Next Door, according to which the wealthy are less likely to spend money on lavish, fancy stuff and more likely to save and invest their money while maintaining a modest lifestyle, and the people with the latest cars and clothes and the biggest houses are more likely to be in debt or living paycheck to paycheck.
posted by bunderful at 5:42 PM on May 23, 2019 [3 favorites]
posted by bunderful at 5:42 PM on May 23, 2019 [3 favorites]
I've often wondered about his ability to float funding for new projects with such a terrible reputation & miserable social capital. And the answer is the classic con-man equation: appeal to greed. His project funders ignore obvious red flags because he seduces their greed with the promise of big profits in return. Then they get burned. That's just what he does.
posted by ovvl at 6:07 PM on May 23, 2019
posted by ovvl at 6:07 PM on May 23, 2019
People tend to confuse two separate things here: his personal wealth and the capital of his businesses.
Why he still personally has money: when you control businesses with significant assets and are willing to ignore all laws, particularly corporate and tax, you can redirect quite a bit of that money into your own pocket. Who cares if the businesses default on their own loans or go bankrupt? Not you! Unless the businesses' creditors are willing to undertake an expensive and risky fraudulent-transfer or preferential-transfer case or claim, you've got yours and have nothing to worry about.
Why sometimes his companies have sometimes still been able to raise capital (prior to presidency): Deutsche (which I expect any day we're going to learn is secretly controlled by HYDRA or some such) and also, oh my God, there is so much dumb investment money out there. Note that in the past decade or so most of his projects have been much less capital-intensive than real estate development. There's a reason for that. (Also note that most real Western banks with real money haven't invested in his companies for decades.)
In both instances, he's been helped along by stiffing and/or cheating just about everyone he does business with.
He probably owes millions in personal unsecured debt. If he hadn't become president, he probably would've done another bankruptcy or three.
(Guys, money laundering is not, generally speaking, a way to make money; it's a way to give money you've made illegally an apparent legitimate provenance.)
posted by praemunire at 7:01 PM on May 23, 2019 [5 favorites]
Why he still personally has money: when you control businesses with significant assets and are willing to ignore all laws, particularly corporate and tax, you can redirect quite a bit of that money into your own pocket. Who cares if the businesses default on their own loans or go bankrupt? Not you! Unless the businesses' creditors are willing to undertake an expensive and risky fraudulent-transfer or preferential-transfer case or claim, you've got yours and have nothing to worry about.
Why sometimes his companies have sometimes still been able to raise capital (prior to presidency): Deutsche (which I expect any day we're going to learn is secretly controlled by HYDRA or some such) and also, oh my God, there is so much dumb investment money out there. Note that in the past decade or so most of his projects have been much less capital-intensive than real estate development. There's a reason for that. (Also note that most real Western banks with real money haven't invested in his companies for decades.)
In both instances, he's been helped along by stiffing and/or cheating just about everyone he does business with.
He probably owes millions in personal unsecured debt. If he hadn't become president, he probably would've done another bankruptcy or three.
(Guys, money laundering is not, generally speaking, a way to make money; it's a way to give money you've made illegally an apparent legitimate provenance.)
posted by praemunire at 7:01 PM on May 23, 2019 [5 favorites]
Looking around, I found this rather comprehensive review: How Trump Actually Got Rich. Short version: inherited a lot, lost a lot, borrowed a lot, then ended up making a lot through licensing. Of course, a huge amount is hidden, so the real story may be quite different. Also many people point out that if he'd just taken his inheritance and invested it in the stock market, it appears that he would have done much better - again, we don't really know.
posted by Mr.Know-it-some at 7:11 PM on May 23, 2019 [1 favorite]
posted by Mr.Know-it-some at 7:11 PM on May 23, 2019 [1 favorite]
money laundering is not, generally speaking, a way to make money; it's a way to give money you've made illegally an apparent legitimate provenance
Unless, of course, one is an actual "launderer", not simply having one's money laundered.
posted by she's not there at 7:39 PM on May 23, 2019 [9 favorites]
Unless, of course, one is an actual "launderer", not simply having one's money laundered.
posted by she's not there at 7:39 PM on May 23, 2019 [9 favorites]
No simple answer for you, but one resource that is helpful is the Trump Inc Podcast. It's done more deep investigative reporting on the Trump Organization businesses than anyone. There's a lot of very squirrely stuff.
posted by Nelson at 8:02 PM on May 23, 2019
posted by Nelson at 8:02 PM on May 23, 2019
I've often wondered about his ability to float funding for new projects with such a terrible reputation
Well, he couldn't get money anymore from the usual banks in New York because of his terrible reputation as a loser. Which is why he went to Deutsche Bank who had no problem laundering Russian oligarch money through Trump. Trump would sell overpriced real estate to the Russians. The Russians got their tainted money converted to U.S. dollars in U.S. real estate. The over-priced payment guaranteed a profit for Trump which the Russians regarded as Trump's cut as a laundering fee.
Trump had lots of these deals where he would buy a piece of property and then immediately sell it to the Russians at a huge markup. It was all pre-arranged using dirty money.
posted by JackFlash at 8:27 PM on May 23, 2019 [2 favorites]
Well, he couldn't get money anymore from the usual banks in New York because of his terrible reputation as a loser. Which is why he went to Deutsche Bank who had no problem laundering Russian oligarch money through Trump. Trump would sell overpriced real estate to the Russians. The Russians got their tainted money converted to U.S. dollars in U.S. real estate. The over-priced payment guaranteed a profit for Trump which the Russians regarded as Trump's cut as a laundering fee.
Trump had lots of these deals where he would buy a piece of property and then immediately sell it to the Russians at a huge markup. It was all pre-arranged using dirty money.
posted by JackFlash at 8:27 PM on May 23, 2019 [2 favorites]
When you're the laundry, yes, you get to keep a good fraction. When you're also the one developing the real estate being used, anyone who isn't actively working against themselves will make extra on the building, too. That particular scheme is why there are so many new high rise condo buildings in Miami. Trump is just a drop in the bucket, which is part of why people in power are reticent to look too deeply into his finances. It has been supporting a lot of the 1% since 2010 or so.
Before that, it was just a modified version of the typical corporate raider shit. Load a company up with debt, pay yourself a large salary and a bunch of management fees, make the company buy goods and services through other businesses you own at inflated prices, then stiff the lenders.
Of course, Trump's dumb ass wasn't nearly as good at it as his daddy was, so he managed to get himself into personal bankruptcy, too. However, since bankruptcy is designed precisely to keep a person from being homeless and in debt slavery for the rest of their lives, he got to keep a bunch of his shit. Between then and the Russian shit, it was the rich person equivalent to check kiting. As long as nobody calls his loans in and the payments are low enough he can make them out of his meager actual licensing income or can get new loans to cover it, the scam keeps going, just like some banks leading up to the financial crisis did, right up until they couldn't.
In short, Trump's seeming wealth has mostly been no more real than mine would be if I borrowed $100 million and started living like a 0.1 percenter for a few years.
posted by wierdo at 8:59 PM on May 23, 2019 [3 favorites]
Before that, it was just a modified version of the typical corporate raider shit. Load a company up with debt, pay yourself a large salary and a bunch of management fees, make the company buy goods and services through other businesses you own at inflated prices, then stiff the lenders.
Of course, Trump's dumb ass wasn't nearly as good at it as his daddy was, so he managed to get himself into personal bankruptcy, too. However, since bankruptcy is designed precisely to keep a person from being homeless and in debt slavery for the rest of their lives, he got to keep a bunch of his shit. Between then and the Russian shit, it was the rich person equivalent to check kiting. As long as nobody calls his loans in and the payments are low enough he can make them out of his meager actual licensing income or can get new loans to cover it, the scam keeps going, just like some banks leading up to the financial crisis did, right up until they couldn't.
In short, Trump's seeming wealth has mostly been no more real than mine would be if I borrowed $100 million and started living like a 0.1 percenter for a few years.
posted by wierdo at 8:59 PM on May 23, 2019 [3 favorites]
Are you old enough to remember that Ronald Reagan bought a (money-losing) ranch in order to have losses to offset his tax bite?
posted by Cranberry at 12:58 AM on May 24, 2019
posted by Cranberry at 12:58 AM on May 24, 2019
My serious question is this: How do you lose money on every venture you've ever undertaken and still have a private plane, a Mara Lago, a 5th Ave penthouse, cars, clothes, etc? If all of this reporting is true, why does Trump have expensive stuff?
Another factor is that he does not own any of this; his companies and non-profits do. Remember that the Trump Foundation was ordered to shut down specifically for inappropriate spending. Everything he wears and where he lives and cars and planes and all that--all of it is ordered by a Trump company (or non-profit), not the man himself. Then the company never pays the bill (see above-mentioned threat of shoddy workmanship and refusal to pay bills) or they do and it's just another business expense using money from Deutsche Bank.
It's all a massive shell game, but in Trump's case it's likely that there isn't anything under ANY of the shells except hot air.
posted by yes I said yes I will Yes at 2:36 AM on May 24, 2019 [3 favorites]
Another factor is that he does not own any of this; his companies and non-profits do. Remember that the Trump Foundation was ordered to shut down specifically for inappropriate spending. Everything he wears and where he lives and cars and planes and all that--all of it is ordered by a Trump company (or non-profit), not the man himself. Then the company never pays the bill (see above-mentioned threat of shoddy workmanship and refusal to pay bills) or they do and it's just another business expense using money from Deutsche Bank.
It's all a massive shell game, but in Trump's case it's likely that there isn't anything under ANY of the shells except hot air.
posted by yes I said yes I will Yes at 2:36 AM on May 24, 2019 [3 favorites]
This thread is closed to new comments.
That's why many rich people advocate for increasing tax on them (like warren buffet)
posted by bbqturtle at 3:20 PM on May 23, 2019 [4 favorites]