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Thursday, May 09, 2019

NYT finally showed the real Donald Trump

The New York Times this week disclosed that Donald John Trump nearly went bankrupt when a recession hit the New York real estate market in 1990.

His net worth plummeted to almost top negative a billion.

This is snooze, not news, because not only did Donald John Trump bounce back but he became enormously wealthy after being merely rich. And he wrote a best-selling book about his ordeal in 1997.



The book began, "It never occurred to me to give up, to admit defeat. True, I was billions of dollars in the hole. The real estate market had disintegrated. Bodies were dropping right and left. Banks folded. The junk-bond market was collapsing. There was no end in sight to the bad news."

The experts wrote him off.

He wrote, "On March 26, 1991, both The New York Times and The Wall Street Journal had front-page stories predicting my demise, detailing the financial trouble I was in. Anybody with a brain who read those stories would have said I was finished. The stories were picked up by radio and television and blasted throughout the world. This was by far the worst moment of my life."

Donald Trump took a phone call from his ex-wife. He recalled the conversation.

Him: "Hello, Ivana, how are you?"

Ivana: "I vant my money now. I vant my money now. I have decided to honor the contract, and I vant a check for ten million dollars and all the other things immediately. I am no longer going to court. I vant my money now."

Who did he blame for his mess?

Himself.

He wrote, "I had taken a siesta. I had relied on other people, many of them highly trained and educated executives. Sure, success in business takes education and training. But it all comes down to feel and touch. I've got the instincts. That's how I'd gotten on top in the first place. I wasn't using my instincts anymore. I'd gotten bored, taken my eye off the ball. Why, I thought, should I work my ass off when I can get somebody to do it for me?

"Everything had gotten too easy. My life had been a series of wins with few, if any, failures. I went to the great Wharton School of Finance and did well. I'd quickly built a huge and successful company."

But he also blamed Congress.

He wrote, "It was 1986, the peak of the real estate market's boom. Some pundits down in Washington, D.C., decided it was time to rein in a few overzealous developers, who, the pols claimed, were unfairly taking advantage of tax breaks and favorable depreciation schedules. The 1981 tax code was revised, and the Tax Equity and Fiscal Responsibility Act of 1986 (TEFRA) was passed, destroying just about any incentive anyone might have for investing in real estate. And, you may remember, it included a stipulation that the tax laws be applied retroactively. Overnight developers and investors went bust by the thousands. The banks did just as badly."

Here's why. First, TEFRA eviscerated the tax shelters -- in place to encourage investment -- thereby leaving investors virtually no incentive to put their money into any type of development -- including low- and moderate-income housing. Second, the upper-income tax rate was lowered from 51 percent to 32 percent. Investing involves risk. With a 51 percent tax, investors might take a chance on a new housing project. If the project went south, the investor could recapture his losses in the form of a tax break. If an investor is taxed only 32 percent, why bother with the risk?"

He had an excellent point.

Donald Trump was dating Wife No. 2, Marla Maples, at the time.

He wrote, "One day, while walking down Fifth Avenue, hand in hand with Marla, I pointed across the street to a man holding a cup and with a Seeing Eye dog. I asked, 'Do you know who that is?'

"Marla said to me: 'Yes, Donald. He's a beggar. Isn't it too bad? He looks so sad!'

"I said, 'You're right. He's a beggar, but he's worth about $900 million more than me.' She looked at me and said, 'What do you mean, Donald? How could he possibly be worth $900 million more than you?'

"I said, 'Let's assume he's worth nothing (only from the standpoint of dollars) -- I'm worth minus $900 million.'"

"This was an interesting period of time, because as I told the story I realized in my own mind that what I was saying was true. I also began to realize that I had better get back to work!"

***

And of course, he went back to work. He stopped digging his hole. He negotiated with the banks to salvage what he could. His name was still on the casinos even if he no longer was the majority owner.

He picked himself up, dusted himself off, and started all over again.

I thank the nincompoops at the New York Times for reminding me that Donald Trump had a second act. This is his third. Someone bigger than any of us wrote this script. We are living it. This is the best eight years of our lives.

22 comments:

  1. You'd think a congress, realizing all this, would give a president with this kind of experience a free hand in getting the debt lowered.

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    Replies
    1. If they did, China would become insolvent.

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    2. The dollar is based on debt since Nixon ended the gold standard. Therefore paying down debt would cause recession. Even worse they refuse to balance the budget spending is truly heading out of control. No matter this fiat experiment will end once Medicare bankrupts DC

      Just check out the unfunded off the books debt its over $200 trillion

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  2. I was a supplier to developers in the late 80's and early 90's. The changes in tax laws were a severe financial blow to everyone involved in commercial real estate and a death blow to those less agile.

    An unbiased media would compare Trump's business to similar businesses from the time and report how many ceased to exist by 1992.

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  3. Interesting fact: Who negotiated for the banks against Trump in the casino deals: Wilbur Ross.

    Trump learned from his failures and we're benefiting from those lessons. Politicians reward failure and we keep paying for their rewards.

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    Replies
    1. So by that we know PDJT holds no grudges. He recognises talent among his adversaries. Too bad the current crop of donks are so lacking.

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  4. That’s why Mr. T and Tiger are friends: Both have had to rebuild themselves after failures of their own doing. Both have owned it. Meanwhile, you’ll never hear the NYSlimes talking about Hunter Biden, beginning with him leaving his wife to start bopping his dead brother’s wife. That’s some creep shit right there.

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    Replies
    1. So true. The Biden situation is sick and creepy. Beau Biden dies so his brother, Hunter, leaves his own wife and starts having sex with his dead brother's wife. How can the media ignore that?

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  5. This is an incredible post, Don. You as well as The Donald just keep getting better. Thank you.

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  6. Retroactive law changes are just wrong...

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  7. Trump testified to Congress about the law. It should still be on YouTube.

    This "article" is designed to malign and dirty up the Trump.

    The news, as the NYT highlighted not long after, was that he was able to come back stronger.

    The Dems have nothing else. They are desperate.

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  8. Still not tired of winning, though.

    But I have a high tolerance for schadenfreude. Your mileage may vary.

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  9. Many great men had failed business ventures, some multiple times, before becoming successful. Nothing to be ashamed of, certainly, and much to be proud of.

    What I want to know is who provided (illegally) Trump's taxes to the NY Slimes?

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  10. Great article, Don.

    I like the last three sentences the best.

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  11. It's very possible that Trump leaked his own old tax returns as a setup for when his more current tax returns are leaked or otherwise made available by requirements for state ballots.

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    Replies
    1. Technically the info was not actual returns, but info based on them.

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  12. As I wander around town buying stuff, I always ask if this is free stuff like Bernie said stuff should be. I haven't found any free stuff, but found a lot of people with a great sense of humor.

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  13. He "wrote" the Art of the Deal in the midst of a 10 year free fall of loss. #billiondollarloser is a fraud. His supporters are dupes. Next time the dupes use their judgement they need to be reminded of their gullibility of trusting the country with a reality tv fraud. Thankfully most Americans know better.

    ReplyDelete
    Replies
    1. Your english syntax is improving.

      Your comment content remains assine, thus, amusingly insignificant.

      I show mercy by acknowledging your comment so you get your gruel on time.





      Delete
  14. Interesting that Trump's travails came about due to the Reagan overhaul of the tax laws since Eisenhower, et al, wrote the loopholes in to compensate for the high rates in the '50s.

    Will AOC and Bernie love Trump now that they see he was making bank off the tax laws they want to go back to? Well, Trump did also find his way under the new rules after his setback.

    Good podcast from Free Thoughts runs down the tax laws and their impact on inequality (with some of the history)
    https://www.libertarianism.org/podcasts/free-thoughts/how-taxation-effects-income-inequality

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    Replies
    1. The problem was to create law that was revenue neutral.

      I believe that has been a bipartisan baseline that deficit hawks could champion.

      Thing is, history has proven them wrong.

      Delete