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Trump Change: Is Donald Trump Broke?

Gage Skidmore

Politics
Trump Change: Is Donald Trump Broke?

Doug Litowitz



"Editor's Note: Alpha Pages contributor Doug Litowitz raises a speculative contrarian position on Donald Trump's exact worth, based on what was released to the FEC.  The bottom line is that no one knows Trump's net worth, but the speculation usually starts in the billions.  Doug Litowitz explores the opposite possibility, namely that Trump is, in relative terms, broke. This is solely his speculation and is not meant as a factual statement but a possibility that has been ignored in the mainstream press."

I’ve just slogged through all ninety-two pages of Donald Trump’s financial disclosure submission to the Federal Election Commission, and I can’t make heads or tails of it. 

I cannot tell how much Trump is worth, if anything. His empire, if he has one, is as mysterious as his haircut, and as impervious as his skyscraper in Chicago - a gigantic phallic mirror named after himself.

In terms of real, lasting assets - is Donald Trump worth roughly $10 billion?

The mainstream press erred horrendously by taking seriously Trump’s disclosure to the FEC, by asking reporters to sit down with the document and try to understand it on its own terms, so to speak. This approach yielded nothing but exhaustion and bewilderment. No one dared speculate that Trump’s purpose in disclosing so much was to disclose so little. It was a 52-Card Pickup, a maze of trees without a forest. The assets - some as small as the single-digit thousands - pile up like obsessive compulsive do-dads in the claustrophobic home of a hoarder. The range of projects goes beyond greed and passes into desperation. High rise buildings and golf courses are one thing, but the list of assets quickly degrades into obscure wineries, Israeli vodka and energy drinks, a mattress and clothing line, television shows, a pension from the screen actors guild, bottled water, book royalties, speaking gigs, and endless inchoate and impossible to value ‘marks’ (i.e. trademarks) and positions in partnerships that have his own name.

This is why the New York Times threw up its hands and proclaimed with cool intrigue that Trump’s income and wealth were “hard to pinpoint.”

The Wall Street Journal punted, saying tautologically that Trump’s disclosures contain disclosures totaling at least $1.5 billion, but conceding that the actual numbers are not known.

Forbes puts his wealth at $4 billion, Bloomberg at $2.9 billion. Trump said recently that he is worth $10 billion and that his wealth has increased by more than $1 billion in the last year due to spiraling real estate prices (this was probably supposed to impress people, but it actually shows a dangerous volatility). The FEC form allows the filing party to value assets and liabilities within a range or at an upper limit, and most of Trump’s assets are vague interests of indeterminate worth and undisclosed indebtedness.

Trump’s illiquid assets and unknown liabilities may or may not offset each other – and he isn’t telling.

What does that leave?

Not much. A relatively small amount of money in a couple of hedge funds, and brokerage portfolios of garden-variety stocks, a couple hundred thousand in gold, and other ho-hum assets consisting almost entirely of his ‘marks.’ He could be worth hundreds of millions, theoretically, but if leveraged, his worth could be negative. Who knows?

This ambiguity plays into Trump’s hands: he loves a playing field where there is no difference between reality and fantasy, where the majestic paneled board room is really a stage set, where he is Making America Great by manufacturing clothes in Bangladesh, where he insults Mexicans and then sues a Spanish television network for not showing the Miss USA pageant, a paean to female innocence brought to us by a womanizer on his third marriage. This is Trump-territory: a nowhere land in which he threatens to sue anyone who disparages the size of an empire that he refuses to disclose. 

You will never figure out Trump’s worth by looking at numbers. He’s far too slick for that, he can hide the ball forever.

So let’s put aside the numbers. Instead, let’s look at his FEC submission as a psychological document, a testament, a confession. 

Here we are faced with a paradox: Trump does not speak, act, or behave like a normal billionaire, nor even like a renegade or eccentric billionaire. He behaves like someone who is desperately broke.

I know that sounds odd. Improbable. Counterintuitive. And I don’t – I can’t – I won’t - say for certain whether he is broke. But I think it is a very distinct possibility.

I base this judgment on many years of working closely with very rich people. I’ve had the pleasure – though that is not quite the right word – of spending a lot of time around people who are extremely wealthy, and none of them behaves remotely like Trump.

For one thing, true billionaires hate seeing their name in the papers or being discussed in public. They don’t want people stealing their ideas, they don’t want scrutiny from regulators, they don’t want others to control the narrative about their business dealings, and frankly there is no financial advantage to being well known among ordinary people who don’t have money to invest.

The truly wealthy seek to be known in the right circles and not to the general public. It’s a fair bet that if the richest twenty hedge fund managers walked down the street, no one in the general public would turn their head; conversely, it is a also a fair bet that the twenty guys at the airport talking loudly into their cell phones about how they are returning to the head office after closing a big deal in Baltimore are actually worth next to nothing. Powerful people have secrets, barriers, walls. If Trump really had special ideas or assets, he would crave secrecy, not publicity.

Second, the truly wealthy do not brand themselves. Whatever you may think of how Bill Gates or Warren Buffett or Steven Cohen made their fortunes, they did not get into the bottled water industry to compete with “Trump Ice,” nor do them sponsor beauty pageants or have television shows where they send out contestants to make ice cream cones and then berate them mercilessly for choosing $1.45 as a price point. There is a very revealing type of bullying taking place on Trump’s show The Apprentice.

He never puts himself up against equals in world of finance, but surrounds himself with childlike sycophants whose fate he controls with an iron hand. By demonstrating so much power against unequal opponents, and by expressing this power in an artificial setting, he actually conveys his own powerlessness in the real world. In attempting to come off as patrician, he devolves into sanctimonious self-aggrandizement while flanked by his robotic and obedient offspring who are displayed like products.

Third, billionaires do not announce how much money they have. It’s déclassé. And they don’t want to boast because it gives the Internal Revenue Service, the SEC, and regulators another bite at the apple. If someone says you are worth $1 billion and you are really worth $10 billion that can be great news! Use it to your advantage.

Finally, real billionaires also choose their deals carefully, weighing risk and return. They don’t start clothing lines or energy drinks because the risks (bad reviews, parodies, lawsuits) outweigh the rewards. What kind of person starts their own Trump University and then lets it dissolve a few years later amid lawsuits and investigations by the New York State Attorney General that the students were being defrauded. What is the economic advantage to a billionaire 10 times over of having a brand of bottled water that brings in $280,000, or a beauty pageant, or a line of cheap clothing, or a modeling agency, when the money can just sit in an account that mirrors the market and makes double digit growth? Some of these eponymous projects can be dismissed as flights of narcissism; but there are so many that something other than narcissism is at work here.

It smells of overreach, desperation, and pettiness.

Fourth, consider how Trump reacts with vituperative indignation when anyone has the temerity to question his supposed wealth. When comedienne Rosie O’Donnell claimed that Trump was a “snake oil salesman” who had been bankrupt, he threatened to sue her for defamation (presumably because the bankruptcy of Trump casino was not a personal bankruptcy for Trump himself). When MSNBC reporter Lawrence O’Donnell suggested that Trump was worth less than $1 billion, Trump threatened to sue. A decade ago he sued the author of a book about him for claiming that he was only worth a few hundred million instead of the nearly $3 billion that he claimed to be worth at the time. He even threatened to sue his ex-wife Ivana for talking too much about his finances, in violation of her agreement to keep quiet. 

Methinks he doth protest too much.

Why threaten to sue someone for underestimating your wealth . . . unless . . . unless . . . unless the sole valuable asset that you have is the general belief that you are worth $10 billion? Unless, that is, if you are really much poorer, and you have nothing to fall back on besides your reputation, and your main asset is the impression you convey. In that case, you might consider doing precisely what Trump does.

Here is where I am heading: Could it be the case that Trump is an empty suit with no meaningful net assets other than his persona, his brand? That like a shark, he has to keep moving and keep projecting the image of great wealth, or else his empire will sink? This is consistent with the FEC disclosure document where so many of his assets are ‘marks’; in other words, he makes money by lending his name.

Trump’s FEC document impresses me as the statement of a person who does not have much of anything other than himself – he is his own product. He is the professional wrestler of the financial world – a person who is famous for being famous, the tragic product of a society that produces images instead of actual things.

Yes, he has built a few golf courses and buildings, but so have others – on a bigger scale; what he has really built is himself, or rather a caricature of himself. My suspicion is that Trump has nothing other than himself. He invented himself. He is his own brand, and that is all he is. Any crack in the mask will cause the whole thing to crumble down. 

It is fitting that he gets a pension from the Screen Actors Guild.

He is an actor who plays a man worth $10 billion.

 

About Doug Litowitz

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Doug Litowitz is a hedge fund lawyer and a former law professor. 
















































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