Tilting Against the World – Failed Business Practices

Stick with me today; it’s a long blog, but it also a wake-up call to those millions of Americans who actually think Donald Trump is an experienced and mega-successful businessman. Goldman Sachs reminded me, when Trump claimed massive business success, that he would have been so much richer if he simply took his sizable inheritance (and daddy’s “business loan”) and merely invested those sums in a DOW average mutual fund.

Despite the fact that any dog could get rich buying Manhattan real estate in the 1970 and 80s and doing nothing with it, Trump claims specialized real estate business prowess. Yet there are thousands of lawsuits surrounding Trump business operations and a disproportionate share of related bankruptcies and failed business (see above picture), everything from a defunct airline, a real estate “university” that settled a fraud claim with a multimillion dollar payment, bankrupt casino operations and a vodka that is no longer poured anywhere, to name a few.

His real estate expertise against Chinese billionaires, who know the market, was a disaster for him. His bullying arrogance just hit a wall. It was 1994, and Donald Trump had over-borrowed and, facing a bank call on his loans, he reached out to Hong Kong financiers to bail him out of imminent financial collapse. The New York Times (5/30/16) summarizes what happened, even before Trump was nominated by the GOP:

“‘I beat China all the time,’ Mr. Trump declared in a speech the day he announced his candidacy. ‘I own a big chunk of the Bank of America building at 1290 Avenue of the Americas that I got from China in a war. Very valuable.’

“Mr. Trump does have an investment in the building, an office tower near Rockefeller Center. But court documents and interviews with people involved in the deal tell a very different story of how he ended up with it… It began when a group of Hong Kong billionaires, including one who has been called the Donald Trump of China, helped rescue Mr. Trump from the verge of bankruptcy by investing in one of his properties in Manhattan…

“To strike the deal, Mr. Trump had to attend elaborate dinner parties featuring foreign foods he did not want to eat. He delayed the closing because of Chinese spiritual beliefs and hunted around New York for a ‘feng shui’ master to help with the building décor, instead of indulging his tastes for marble and gold, according to former associates of Mr. Trump who were involved in the deal

“But when his Hong Kong partners sold the property without his support, Mr. Trump waged a bitter, long-shot legal battle against them. And far from winning his share of the Bank of America building, according to court documents, he had to settle for it after losing in court. In the end, Mr. Trump’s alliance and eventual rivalry with some of Hong Kong’s richest men proved to be a tale of Mr. Trump at the extremes. It showcased his unflagging confidence in his ability to turn a bad financial situation around. But it also underscored his willingness to destroy a fruitful relationship with aggressive litigation.

“Their partnership began in 1994, after the collapse of the real estate market left Mr. Trump deeply in debt. He could not afford to make the bank payments on a 77-acre swath of land near Lincoln Center known as Riverside South, let alone to develop the property.

“In need of cash, he agreed to meet with intermediaries from a consortium of Hong Kong billionaires who were willing to buy the land, assume Mr. Trump’s debts and pay him 30 percent of the profits, as well as fees for helping to manage the development of the site, which they agreed to finance. It was by far the best offer he received

“The Hong Kong partners were wary of Mr. Trump’s well-earned reputation for litigiousness. But for more than a decade, Mr. Trump avoided conflict with them. Indeed, he often deferred to them. Chase Manhattan Bank, which held Mr. Trump’s mortgage, initially scheduled the closing of the deal during China’s Ghost Month, during which some believe the spirits of the dead roam the earth.

‘The Chinese told me that we would have to wait until after the fifteenth of September to close the deal,’ [Abe Wallach, Mr. Trump’s executive vice president of acquisitions and finance at the time] wrote in a chapter of an unpublished book he is writing about his years with Mr. Trump. ‘Trump went apoplectic.’ But he said that Mr. Trump went along… [The deal closed…]

“Instead of accepting his share of the proceeds, Mr. Trump sued his partners for ‘staggering breach’ of fiduciary duty in a lawsuit that demanded $1 billion in damages. Mr. Lo [one of the primary investors], who felt that Mr. Trump should have been appreciative of the deal he had received, called the lawsuit ‘a shock.’… And when the Hong Kong partners sought to invest the proceeds from the sale in Bank of America buildings in San Francisco and New York, Mr. Trump sought an injunction to scuttle the deal.

“The judge ruled against him. Instead of receiving the cash he wanted, Mr. Trump had to accept a 30 percent share in the profits from the two Bank of America buildings, tied up in a partnership that is slated to last until 2044. But today, Mr. Trump counts that legal defeat as a victory.”

Today, Donald Trump seems to have declared a tariff war against the rest of the world. That our economy is in the hands of an egotistical incompetent should scare most of us… but most Americans simply lack the sophistication to understand the failings of man who dramatically underperformed the marketplace based on money he just inherited or borrowed from his father. Trump is great at marketing success and skills he has never had. His biggest successes are bullying and spinning failure to look like a big win. His gullible base, willing to back a rogue Washington outsider at any cost, has bought into that fake persona hook, line and sinker.

Trump’s recent announcement of a new trade agreement with Mexico… well… it just isn’t remotely yet a trade agreement. What looks like a power play is supposed make Canada desperate to negotiate, has a huge catch. Despite Trump’s attempt to cast the deal as a non-NAFTA bilateral deal between the U.S. and Mexico, the Congressional mandate under which he is operating only empowers him to remake the NAFTA agreement, which cannot happen until Canada signs as well. Further, while broad strokes of a possible detailed agreement were generally negotiated, there is a lot of missing specificity that would be needed to have an enforceable agreement. A lot of stuff has to happen first! “The evaluation from Goldman Sachs economists was… polite: ‘We do not expect the revised terms to have substantial macroeconomic effects in the U.S. if they do take effect.’” Los Angeles Times, August 29th.

Not that what was agreed in broad strokes was so good anyway: “The contours of a ‘very special’ and ‘incredible’ deal with Mexico that Trump announced Monday [8/27] remain preliminary and are subject to Congress’ approval. However, the deal may meet neither of Trump’s main goals, industry experts and analysts say. If anything, the deal, which now needs Canada to sign on, could do the opposite. And that may come back to bite the president politically.

“‘It will cost us jobs,’ was the blunt assessment offered by Mickey Kantor, who shepherded NAFTA into existence when he was then-President Clinton’s trade representative. ‘Why we’re doing this is mainly to fulfill a political philosophy rather than create jobs.’” LA Times. For example, Americans looking to buy a new car anytime soon, above the rather massive increase in the costs of steel and aluminum under Trump’s 25% tariff against most of the world, if the Mexican trade agreement comes into effect, they can add additional costs to consumers because of automotive component manufacturing agreements (as to increased wages required to paid in Mexico and how much has to made in which country). But wait, there’s more.

Just about every nation in the world is a signatory to the World Trade Organization, an internationally dispute-resolution/regulatory body generally constructed to encourage free trade, a long-time GOP fundamental policy. But the WTO just ruled that the U.S. special tariff on Canadian supercalendered paper – mainly used in magazines, catalogues, corporate brochures and advertising inserts – had no justifying “national security interest” for the United States and generally violated WTO treaty requirements. Trump’s response?

“‘If they don't shape up, I would withdraw from the WTO,’ Mr Trump said in an interview with Bloomberg News… The WTO was established to provide rules for global trade and resolve disputes between countries.

 “Mr Trump says the body too often rules against the US, although he concedes it has won some recent judgments.

“He claimed on Fox News earlier this year that the WTO was set up ‘to benefit everybody but us,’ adding: ‘We lose the lawsuits, almost all of the lawsuits in the WTO.’

“However, some analysis shows the US wins about 90% when it is the complainant and loses about the same percentage when it is complained against.

“Mr Trump's warning about a possible US pull-out from the WTO highlights the conflict between his protectionist trade policies and the open trade system that the WTO oversees.” BBC.com, August 31st. Without the WTO, America’s place in the global economy would definitely be in jeopardy, no matter how much Trump thinks otherwise.

In the end, American consumers will be the biggest losers, a paltry number of new jobs will be created in arenas like steel and aluminum manufacturing which will never employ a mass of workers, while a lot more Americans in other fields (like automotive manufacturing, sales and maintenance) will lose theirs. Think Trump is even close to level of competence of genuinely self-made billionaires, from Warren Buffet, George Soros, Bill Gates, Jeff Bezos or Mark Zuckerberg? Insert gales of laughter.

I’m Peter Dekom, and the buffoon emperor in the White House is absolutely without a stitch of credible clothing surrounded by “experts” who share his dress code.

The Great Betrayal of Working Americans

 “Happy Labor Day!” Donald Trump

Donald Trump is all about looking good and sounding like he knows what’s best for us all. He is a businessman who has underperformed compared to others who started out with less or equal amounts of family money… or those self-made billionaires… who found most of his fame as a bullying-businessman reality television star. That he did well. That persona was his key to success. He never really cared about “ordinary” people… until they turned out to be the audience that made him famous.

They listened to him, hung on every word, admiring the success he claimed without questioning the thousands of legal cases surrounding him and his companies, the serial bankruptcies of some of his most visible endeavors or the trail of pain he left behind his misdirected economic ventures. He had a staggering male following that admired his bravado and envied his machismo, his wanton pursuit of sex with beautiful women regardless of the moral or financial cost.

They elected him. He continued to talk to them, making them promises… but he even had to create or “observe” problems that only he could solve. They continue to believe him even as he disrespects their military heroes and continues to hack away at their financial future while assuring them that this is only a temporary discomfort, a necessary precursor to the good times ahead. He remains a consummate liar, denigrating any faction or force that dares oppose his vision.

And boy does he know how to lie with statistics, pretending that “average” economic metrics – numbers which soar because the rich simply pull up the numbers as a whole – when 70% of American haven’t seen an increase in buying power in 40 years and 40% of Americans have faced a trough in their ability to pay bills when there just wasn’t enough at least once in the past year. See my August 30^th blog, The Weakest Economy with the Best Statistics, if you want more detail.

Just about every major Trump-GOP political appointment, every proposed and passed major legislation, most of his executive orders and most certainly his thrust toward financial and environmental de-regulation – with a few gestures for right-wing social conservatives to keep them in line – has exacerbated income inequality by making the rich richer while seriously slamming the vast majority of working Americans, particularly the main constituencies in his base. The great betrayal.

Food costs have risen. Healthcare costs are soaring. Fuel and housing costs have skyrocketed. And while pay has gone up, and the tax cut has benefited a few in the middle class (those who live in low-tax states), none of these realities has remotely kept up with the accelerating cost of living. The new jobs that have been created, except for some tiny pockets of lucky workers, have carried low pay and few benefits with little or no opportunity for advancement. Lots of part-time and gig work, though. But if you live at the top of the economic ladder, this may be the best of times… ever.

The well-off in the United States have faced the disappearance of upward mobility, the polarization of income extremes and the threats from those at the bottom of the economic pile with no hope, no money and few if any prospects, by circling the wagons. There is a stark realization that an increasing number of people at the bottom and the middle of this country are very angry at their helpless exclusion from what was once believed to be a universally-achievable American dream.

In the early 1980s, gated communities (not counting doormen in high rise luxury apartments in big cities) were rare in the United States. But as income inequality began to rise, so did the number of closed communities. “Across the United States, more than 10 million housing units are in gated communities, where access is ‘secured with walls or fences,’ according to 2009 Census Bureau data. Roughly 10 percent of the occupied homes in this country are in gated communities, though that figure is misleadingly low because it doesn’t include temporarily vacant homes or second homes. Between 2001 and 2009, the United States saw a 53 percent growth in occupied housing units nestled in gated communities.” Rich Benjamin writing an op ed in the New York Times (3/29/12). Since the Great Recession, the trend towards guarded and gated communities in the United States has soared.

Many of those left behind by the American dream turned to populist Donald Trump, who makes pledges but absolutely cannot return these workers to their economic blue-collar bliss of yesteryear. They have bought into his non-white immigrant/foreign economic powers blame game… completely forgetting about the rich folks here who bought the automation to drive blue collar workers out of their high paying (costing?) jobs. When that realization finally sets in, where exactly will that rage be redirected?

A few of our wealthiest citizens, from Warren Buffet and Bill Gates to George Soros and Jeff Bezos, have come to the realization that an economically stratified/severely income polarized society cannot survive. Whether for altruistic reasons, an understanding that without consumers able to buy their products and services they have no business or perhaps a vision of the rich who were killed in the “Let them eat cake” French Revolution, they know that extreme economic disparity often generates violent political instability. In a nation with as many guns as there are people, the risks are only amplified.

A few more rich folks, having slorped at the tax cut “trough” with big smiles (see below), are now turning on their Trumpian savior because his trade war and economic isolationism are beginning to cost them bigtime in their international forays. They know he can decimate some of their most important growth opportunities overseas. With growth from consumer buying-power within the United States level, the loss of economic growth overseas is devastating to so many U.S. companies. But Donald Trump continues to play his dangerous brinkmanship, promising much to the masses but delivering almost nothing.

Donald Trump will embrace extreme right-wing, evangelical social conservatism to get as many votes as long as his rich cronies’ agendas (his interpretation of those priorities anyway) can be implemented. Remember his promises when his multi-trillion-dollar corporate tax cut was proposed? Higher salaries and lots of hiring by the companies benefitting from the cut? While all Americans are now saddled with the trillion-plus dollar hit that the tax cut is imposing on our deficit, the few Americans who really benefitting from those tax savings are hardly pouring that money to make good on Donald Trump’s promises.

The Guardian U.K. (September 1^st) looked at the hard numbers since that tax cut went into effect: “Analysis shows just 6% of corporate gains from Trump’s tax cuts have trickled down to workers as raises, bonuses and investments… US stock markets keep hitting record highs – as anyone who follows Donald Trump’s Twitter account can’t help but notice. And ‘more good news is coming’ for those who have ‘made a fortune’ in US stocks, the president promised this week.

“But behind Trump’s sunny, late summer disposition, there is growing concern that the principal beneficiaries of Trumpian economic largesse are those like him in the uppermost reaches of the economic scale.

“The top 10% of American households owned 84% of all stocks in 2016, according to a paper by NYU economist Edward Wolff. As the markets have been driven higher by an unprecedented binge in share buybacks, boosted by Trump’s historic corporate tax cuts, those gains have disproportionately gone to the very wealthy…

“[American] companies have spent a stunning $5.1tn buying their own shares since 2008. According to a UBS report in June, repurchases are up 83% year to date, far ahead of the 9% gain in dividends.

“And no one loves share buybacks more than tech, with Apple representing about 20% of the sector’s total with $219bn of share repurchases since 2015, according to its website, and stated plans to allocate $100bn more. Led by Apple, tech buybacks have jumped $160bn in 2018, an increase of more than 200% from 2017.”

In short, except when he can “give” on a social policy that does not cost him and his rich cronies hard cash, Donald Trump is only the president for a plutocracy where he wishes to be and remain the autocrat with the ultimate power over everything. Did you really listen to the speeches at John McCain’s funeral service in Washington? Trump’s folly was plain to McCain, a staunch Republican. Why is the rest of the GOP so completely willing to sell their souls and the soul of the entire nation for a platform that does not, cannot and will never work?

I’m Peter Dekom, and as Donald Trump battles for absolute power, we all need to remember that absolute power corrupts absolutely… and Donald Trump came into power on a massive surfboard of corruption that he took decades to build before he even ran for office.

What Do Brazil, the United States, Mexico, Colombia, Venezuela and Guatemala Have in Common?

Las Vegas the Day After the 2017 Mass Shooting that Left 59 dead and 500 injured

Together these countries have about 10% of the earth’s population. But these six nations also account for over half the world’s gun deaths by civilians. Of the one million firearms in civilian hands around the world, the United States, with under 5% of the planet’s population, accounts for almost a third of those weapons, including more than a fair of legal, military-grade assault rifles.

According to a recently-released study from the American Medical Association, in 2016, firearms in civilian hands “ended the lives of about 251,000 people in 195 countries and territories that kept reasonably detailed death records. Those deaths included homicides, suicides and accidents… [that would be the equivalent of the] death of every man, woman and child in the city of Glendale, Ariz., America’s 87th largest city.” Los Angeles Times, August 28^th. Death from Islamic terrorism was just a tiny drop in that carnage bucket.

The issues surrounding non-combat-related firearm deaths fall all over the map, but the devastation is not limited to the individual victims. There are families, businesses, even political systems that are placed in jeopardy. Sometimes, gun trafficking is the product of easy gun access in a neighboring country, and the United States is clearly the biggest offender in this category. “[But civilian firearms] kill people — men overwhelmingly — who are in the prime of life, between the ages of 15 and 40. In 2016, they killed 7,220 children before they reached their 14th birthday. Boys in this age group died at two-and-a-half times the rate of girls.

“Guns cut short the lives of women too, with homicides vastly outnumbering suicides. Unintentional deaths involving women and guns are vanishingly rare.

“Other research has found a link between firearms ownership and fatal ‘nonstranger’ violence in the United States. The authors of the new report noted that ‘although men are most often the targets of firearm violence, they are also the most likely perpetrators, often in the context of domestic and relationship violence.’

“The study also makes clear that the United States has played a key role in setting the stage for gun-related deaths across the Americas, both by supplying the weapons and sustaining the drug trade that drives the mostly illegal use of guns in these countries. In many of these countries, few guns appear to be in the hands of legal owners.

“By creating national baselines of gun deaths and showing trends over time, the new tally lays the foundation for cross-cultural comparisons. That could allow future researchers to explore why gun deaths have dropped so dramatically in some countries while rising in others, and to ask whether government policies played a role. It will permit them to study whether and how the circumstances of nearby states — such as gun behemoth the United States — subvert or promote a country’s efforts to drive down gun deaths.” Los Angeles Times.

In most countries, the right to own a gun is either completely outlawed (bans can just be limited to handguns and assault weapons), limited to certified hunters after a very long and detailed background checks or subject to a severe permitting process. But in some countries, there is also a constitutional right to bear arms. You might be surprised that despite hundreds of thousands of firearms floating all over Mexico, virtually all of them illegal and smuggled from the United States, the country has a constitutional version of our Second Amendment. But with one gun store (government run) in the entire country (in Mexico City; you have to go there in person to apply for a gun) and one of the most exhaustive sets of testing and training, Mexico probably has no more than 20,000 legal civilian firearms.

So for all the dead Americans, too many of them children, obliterated by privately-owned guns, even knowing that a maniac can kill so many more people with an automatic weapon than with a knife and further knowing how easy it is to buy or obtain a gun no matter who you are, masses of Americans swear that their right to gun ownership is absolute, sacred and without serious constitutional restrictions.

As a practicing lawyer for over four decades, I can affirm that the Constitution most definitely does not prevent any American government, state or federal, from passing reasonable gun control. Yet Americans are over 100 times more likely to get killed with a gun than an average Singaporean, living in that tiny island democracy with free healthcare, free high-quality education and one of the lowest crime rates on earth. There is no justification I have ever heard for the rather open and uncontrolled pervasive presence of guns in our society. For every justifiable gun homicide in this country, there are thirty gun homicides that aren’t.

I’m Peter Dekom, and our ultra-violent, gun-obsessed culture continues to be an unfathomable proclivity that not one single other country on earth understands.