Friday, December 9, 2016

Trump too broke to sell off?

Like many of us, Josh Marshall wonders why Trump declines to sell his assets and put them in a blind trust. And he comes up with a plausible theory:
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.
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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 Matt Lauer 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.
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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 confirmed in 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.
Since we don't have Trump's tax returns, there's just a huge amount we don't know about his businesses. What we do know is that Trump appears to wildly exaggerate the scale of his wealth and exhibit a stinginess that is very hard to square with a man of the kinds of means he claims. A heavily leveraged business, one that is indebted and dependent on cash flow to keep everything moving forward, can be kind of like a shark. It has to keep moving forward or it dies.
Perhaps Trump simply doesn't feel like he can trust anyone else to keep the whole shambling enterprise afloat. More plausibly, and consistent with Trump's history over the last couple decades, Trump's business is dependent on an ever expanding number of deals not just to grow but to stay afloat at all. It is certainly plausible that if Trump simply sold off his company in toto, he'd be in debt. Maybe there wouldn't be anything left to put in a blind trust.
This is all necessarily speculative because Trump has kept the details of his business empire hidden from the public. But behavior, circumstantial evidence and lots of evidence of tight reliance on cash flow to service debts of various sorts suggest that Trump may not be able to divest or separate himself from his business. Why doesn't he? Why does he court all this controversy? Because he can't.



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