trump Archives - Bankers Anonymous

October 29, 2020November 11, 2020

A Visit To Trump Country

As a kind of time capsule regarding democracy in America, I wrote a bunch of posts (6) following the 2016 election. You can revisit them, starting with the first one here.

In advance of next week’s election, I wanted to write about a recent ugly Saturday morning encounter. It fills me with dread for the election, and for whatever comes after.

Last month my family and I drove to a small rural Hill Country Texas for socially-distanced State Park family time.¹

Garner_state_park — Frio River in Garner State Park

During the drive 1.5 hours directly west of San Antonio, of course we saw our fair share of Trump2020 and Trump/Pence signs. That was to be expected.

We live in a downtown San Antonio bubble which, like all of Texas’ cities, bleeds blue. But I know, overall, I live in a one-party state. ²

Saturday morning, 9am, Central Breakfast Taco Time. Hill Country, Texas.

We drove from our AirBnB to the nearest drive-through breakfast place. There were only three places that seemed to be serving breakfast in town, and the first two didn’t appear to have outdoor seating. ³

Getting into the drive-through line required a second pass through, left onto a side road, before circling back and getting line.

The first strange impression on this side road was the line-up of fifty or sixty cars, all parked but with people in them. This was in a very small town, where fifty cars represented a major part of the town’s population. ⁴

So many people lined up in cars, patiently waiting presented a puzzle at first. But I guessed (correctly, it turned out): Food Bank.

Parked in line for the drive-through tacos window we faced the Food Bank line, half a block away. But that wasn’t the big shock. The big shock happened after the middle aged, white lady in the drive-in window looked up expectantly, to take our order.

Coffee, water, tacos. Normal stuff.

We could see two other wait staff – another middle-aged woman and a younger man – inside bustling around, serving the people seated inside the restaurant.

The blue t-shirts of the two waitresses matched. Maybe a uniform? But no, actually they wore a “TRUMP 2020” t-shirt, printed with large white lettering on dark blue.

That was surprising, as both waitresses wore the same political shirt at a taco place.

But below, under three white stars to offset the TRUMP 2020, was the message, “FUCK YOUR FEELINGS.”

I turned back to my wife in the shotgun position. Had she seen this? Oh yes, she’d seen it. My two daughters in the back seat hadn’t read the shirt yet.

Well. Despite her exhortation to self fornicate, I can say I had a whole bunch of feelings.

Wearing a political t-shirt while serving breakfast is certainly a choice. A rare choice, but one that could only be taken with the knowledge of what the restaurant owner would want. And relatedly, what customers would want. But this was not an ordinary political t-shirt. This was an attack on any customer who didn’t share their sentiment. I don’t share their sentiment.

“Fuck Your Feelings.”

Not: Vote Trump if you enjoy business de-regulation.

Not: Vote Trump if you want lower taxes.

Not: Vote Trump because you believe he’s a useful tool for placing judges who will rule in line with the current Christian-Political-Right.

Rather: Vote Trump, and also, if you have any disagreement with me – or any empathy for people who are different from yourself – go fuck yourself.

That, I felt, told me a lot about what management of this restaurant believed. About customers of the restaurant. About this town. About America in 2020. And, I couldn’t help but think, about their feelings for the fifty or so cars lined up half a block away. Lined up for food.

fuck_your_feelings — The cruelty is the point

Something clicked into place for me. More concretely than it has in the past 5 years of the Trump nightmare. His supporters hate the people he hates. His contempt, his attacks, his denigration of others.

His denigration of “The Other.”

As Adam Serwer said long before me: The cruelty is the point.

They don’t care for his policies. (He has no policies.)

They care that he hates the right people.

I couldn’t help but feel that the waitress’ t-shirt was a direct attack on the people lined up a half a block away, trying to get enough food for the week for their families. The people in line for food from the food bank aren’t thriving in Trump’s America. For that matter, the woman serving breakfast tacos to me through a drive in window isn’t thriving in Trump’s America either.

But she seethes with hate. How else to explain “Fuck Your Feelings” as, practically a business slogan? She may have very little power, but she has power over the people in line for the food bank. She derives power from his attacks.

After we paid and she handed us out tacos through the window, she said goodbye with “Have a Blessed Day.” Because of course she did.

“Fuck Your Feelings!” Just like Jesus would say.

Did she notice the rainbow Beto sticker, leftover from his 2018 Senate campaign, on the back of our car?

Sunday morning, 10am Tubing Central Time. Hill Country Texas

The next day on our trip we rented inflatable tubes to go down the Frio River from an outfit that flew a “TRUMP 2020: No More Bullshit” flag. This wasn’t as aggressive as the taco place t-shirt uniform but was further confirmation that:

a) Only expletives properly express Trump supporter views, and

b) Trump, the greatest con artist in history, somehow always manages to make his supporters project Trump’s flaws on to the rest of the world.

I mean, “End The Bullshit?”

The guy is the biggest and most successfully bullshitting bullshit artist who has ever lived. And he has his supporters (I understand, between 40 and 45 percent of my fellow citizens) believing that Trump will “end the bullshit?”

I just. I mean. This is amazing.

Anyway, here’s hoping our Democracy doesn’t end next week.

But if it does, well, Fuck Your Feelings. And do have a blessed day.

Trump Part I – Fever Dreams

Trump Part II – Review of Recent Elected Authoritarians

Trump Part III – The Use of Security Crises

Trump Part IV – The Economic and Financial Crisis

Trump Part V – The Constitutional Crisis

Trump Part VI – Principled Republican Leadership

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Garner State Park and Lost Maples State Park. Both beautiful! ↩
There are no statewide elected Democrats as of October 2020. Maybe that will change on election day November 3 2020, but it still feels probably 4 years too early for a statewide Democratic win. ↩
Drive-through or outdoor seating is our key criteria for eating out, during COVID times ↩
The official population of Leakey, TX is 468 people. Fifty cars all lined up at the same time is…a lot ↩

December 27, 2019December 27, 2019

Weird Finances Of Trump Campaign Manager’s Company

Editor’s Note: This post ran as a newspaper column in November 2019. Parscale resigned from the board of the company on December 10th, according to a public company notice. I did an interview with Texas Public Radio about that development here.

The head of President Trump’s re-election campaign, Brad Parscale, serves on the board of – and owns rights to acquire a majority stake in – an odd penny stock company headquartered in San Antonio called Cloud Commerce. The company publicly filed its intention on October 31, 2019 to raise up to $20 million through issuing preferred stock.

It’s clear from public company filings that Cloud Commerce needs this money. The firm has consistently lost money every single year since at least 2012, when current management took over. It’s less clear why anyone would give them money.

To state the obvious, successful companies fund themselves through ordinary revenues and, hopefully, profits. But it’s hard to maintain a company like Cloud Commerce afloat when it loses money year after year. You have to resort to either borrowing money or issuing new shares. Cloud Commerce has gotten into a weird financing habit of doing both.

“Substantial Doubt” and “Going Concern” language

The company’s disclosures, in dry auditor-speak, use boiler-plate language which reflects the financial reality of Cloud Commerce.

In a recent quarterly filing dated November 14, 2019, the firm wrote

“The Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern.”

The company’s annual report filed April 15, 2019, states “We have experienced net losses and negative cash flows from operating activities, and we expect such losses and negative cash flows to continue in the foreseeable future.”

This doubt about the company’s continuation “as a going concern” due to lack of revenue and losses each year is repeated in year-end filings every year going back to 2012, when the current management team took over.

The company had net losses and negative cash flows and substantial doubt about its ability to continue as a going concern in 2017 when it purchased Parscale’s business, which raises the question of what advantage Parscale saw in the sale.

Parscale received rights to obtain a majority of the shares in the company when he and his San Antonio-based partner sold their web and design company to Cloud Commerce in August 2017.

Financing Through Convertible Debt

Before that, beginning in January 2016 and continuing right up until the week Cloud Commerce acquired Parscale’s business in July 2017, a primary source of working capital for the company appears to be loans from the company’s CFO, Greg Boden. Throughout 2016 Boden issued a series of loans worth a total of $1.1 million from an investment company he owns named Bountiful Capital LLC, to Cloud Commerce.

Between May and July 2017, Boden made seven more smaller loans to Cloud Commerce, in amounts ranging from $26,000 to $105,000.

All of that debt soon became a different financial instrument.

On the same day as the acquisition of Parscale’s company, Boden turned his total of $1.4425 million in loans into preferred shares that give him the right to convert into 144,250,000 common shares of Cloud Commerce.

If fully converted into common stock, the total amount of 144 million shares would exceed the amount of common shares outstanding in the company, currently 137 million. Conversion would make Boden the majority shareholder in the company.

Meanwhile, Parscale’s deal gave him the rights to own 225 million shares in Cloud Commerce. Those rights would make him the majority owner, if he chose.

Prior to that, an earlier transaction gave a different ownership group preferred shares with rights to own 450 million shares.

Are you confused yet? It appears three different groups have to right to exercise an option to own a majority of Cloud Commerce.

In 2019, in the absence of sufficient revenue and profit, Cloud Commerce has continued to fund itself through convertible debt.

Seven times between January and July 2019, the company borrowed money at 10% annual interest, with the lender’s option to purchase new shares at a 39% discount to average market prices, six months later. So if the stock traded at an average of 0.01, the lender could convert the debt into shares at $0.0069. As of this writing, the company borrowed $397,000 this way in 2019. Public filings do not name the lender on the convertible notes between January and July 2019.

If you squint your eyes a bit, these convertible notes represent a kind of financial magic for the lender. The game here is that the lender gets to convert the loan into common shares at a deep discount to the stock’s market price.

When you can buy something seemingly worth a dollar for just 69 cents, then in the finance world you want to do that type of transaction all day long.

But to be clear, this is not a normal public company transaction.

Normal public companies sometimes do issue new shares at a slight discount to current market prices, such as 5%, to preferred investors, for strategic reasons. Normal companies do not, however, issue shares at a 39% discount to market prices.

From the perspective of a normal existing shareholder in a public company, a company issuing shares at a 39% discount to market value would be bizarre and wealth-destroying. If Cloud Commerce had any meaningful outside shareholders, they would howl at the unfairness of new share issuance at a 39% discount.

This in itself is not illegal. But it is bizarre.

Of course, it would be extremely difficult to ‘cash out’ Cloud Commerce shares at $0.01, to earn that theoretical free money profit, when there aren’t any noticeable willing outside buyers. Daily volume in this stock does not usually exceed $750.

For insiders to profit, most penny stock schemes like this depend on a pump-and-dump mechanism. You know, issue a series of positive press releases to pump up hope among unsophisticated buyers who jump on board. These new buyers prop up the price long enough for insiders to dump their shares at a profit.

Who’s Zooming Who?

This brings us back to the great mystery of Cloud Commerce, and Trump campaign manager Brad Parscale’s willingness to get involved with them. What is the game here? As the late great Aretha Franklin once asked, “Who’s Zooming Who?”

If the general rule of strange penny stock companies like Cloud Commerce is that they are hotbeds of market manipulation and pump-and-dump schemes, we would kind of expect that the insiders would be looking to take advantage of outsiders. Issuing rights to create nearly a billion shares at around 0.01 over the past few years to insiders mostly just shuffles around who owns the company amongst the insiders.

Actually making money from share ownership would require outsiders to become interested in buying these shares. Whether for $0.01, or at whatever price. Failing that, you could try another scheme.

You could try for example to raise $20 million from credulous buyers, so that owning a majority of a $20 million shell company would actually be worth something.

From everything I’ve seen, President Trump’s campaign manager Brad Parscale hopes to profit from questionable tactics in order to fool a gullible public with the flim-flam illusion of a successful businessman and a profitable business.

In a related story, he’s also involved with a company called Cloud Commerce.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Please see related post:

Potemkin-finances of Trump Campaign Manager company

Recording My Thoughts on Trump, in Fall 2019

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October 9, 2019October 11, 2019

Pinning President Trump

Like everyone, I honestly don’t know what’s going to happen with Trump. I have a grim theory, which I lay out at the end of this post.

In the spirit of a diary entry, I wanted to record my thoughts in October 2019. Impeachment has begun, but the outcome seems highly uncertain. I did this once before. In the month following the November 2016 elections I speculated on Trump’s future effect on authoritarianism, security crises, the economy, constitutional and democratic norms, and his fellow Republicans. On balance, versus those speculations, my worst fears about his authoritarian instincts have come to pass, and principled Republican opposition has been weaker than I even expected.¹ We have not had a security crisis,² nor a true economic crisis, thank goodness. In October 2019 we are, however, in the midst of the constitutional crisis I feared.

McConnell_Red_Wall — McConnell and the Senate “Red Wall” keep Trump in office, despite his obvious destructiveness to the Republic

If nothing changes from where we are now in mid-October 2019, it seems that the Republican red wall in the Senate will keep Trump in office, even after a Democratic House impeachment vote. I see the effect of that red wall as signalling a reward for Trump’s corruption, flouting of constitutional norms around the separation of powers and checks and balances, traitorous foreign policy, feckless and reckless financial and trade policy. Not to mention his general rapey approach to women and disgusting view of people living in or immigrating from Central America or Africa (or any place outside of Northern Europe.) And not just a reward, but a vindication of his style and an open invitation to do more crimes, more corruption, more subverting of our political system. Expect more rapeyness, more white nationalism, more inhumane treatment of immigrants. Why not? His party won’t abandon him.

As he famously said, he could shoot someone on 5th Avenue in broad daylight and get away with it. The puzzling challenge of Trump is that he commits the most brazen crimes in the open – profiting from his office through his hotel business, inviting corrupt authoritarian governments to destroy his domestic enemies, urging violence on the media and political opponents, siding with dictators, undermining our intelligence agents, wrecking global alliances built over generations – and we can’t quite believe our own eyes and ears. Surely he’s joking, right? Does he really mean that? Yes, he really does.

Given what we already know about Donald Trump as President, what would be required to alter Mitch McConnell and other Senate Republican’s views on impeachment? It’s hard to imagine what more in America he could fuck up.

Does the stock market have to go into free fall? Does Russia have to declare it is taking back Alaska and Trump says that’s fine, because Alaska is kind of a frozen shithole place and Fairbanks is no good for building gold-plated hotels anyway? Would that do it?

A few other thoughts.

The Nixon resignation/impeachment experience shows that Republican supporters may stay strong up until the last minute, but that when they flip, they flip quickly and all at once. What causes that – beyond what we’ve already seen from the Trump administration, like Ukraine/China/Russia foreign policy treachery – I can’t really imagine. For them not to flip on Trump already at this point, but to flip at some further traitorous action…well, I guess things have to be even darker than they are today, which isn’t something to exactly look forward to.
The Clinton non-resignation/impeachment experience shows that a President who has little personal shame and decides to just “stick it out” against his political adversaries will likely survive an impeachment vote in the Senate. All evidence suggests Trump has even less sense of personal shame than Clinton. So he’ll go the distance as long as he can. He’ll never resign if Republican Senators don’t turn on him.

My prediction: This comes down to what the people in uniform decide to do, when ordered by the courts

My own grim feeling about where we are headed at this point, given the lengths Trump and his supporters are willing to go to subvert the rule of law and to obstruct justice:

At some point removing Trump from office will come down to a choice made by the people who literally wear the uniforms and carry the badges indicating they have a monopoly on the legitimate use of force in our society.³ The uniformed folks will receive a set of orders from a court to arrest him, his family, or members of his inner circle, and he will shout to countermand those orders and to instead arrest Pelosi, Schiff, Nadler, AOC, or whomever comes to mind in his addled brain at that time.

Whether or not he is removed from office at that point will come down to whether the people in those uniforms feel they owe loyalty to an abstract set of constitutional ideals, or whether they feel they owe loyalty to the Commander in Chief shouting and bullying them and resisting arrest. I wish I were kidding that that’s where I think this is headed.

I wish I felt more secure that the people in the uniforms will make the right choice.

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Paul Ryan caved. Rand Paul flipped. John McCain died. Lindsay Graham did whatever he did, with zero evidence of personal pride or consistency. Mitt Romney furrowed his brow and has expressed “concern.” If we were waiting for unified and principled Republican leadership as a check on the President, as I had hoped for in December 2016, we are officially fucked. ↩
I would say the daily & weekly mass-shootings & gun terrorism is a form of a security crisis, but not one that the Trump administration has exploited for consolidating its power, in the way it might if the daily & weekly gunmen were Islamic terrorists. Which they are not. ↩
I mean the police, the army, the secret service. ↩

May 9, 2017

The Border Wall Nonsense

Invasive vines creep over the hedge separating my house from my next-door neighbor’s house. Sometimes those vines even touch trees in my yard. That’s why every night I stand on the top of a giant ladder, shouting into a megaphone, straight into their yard. “You’re going to cut those weeds right now! And then you’ll pay for a gardener to get rid of the roots! You’ll see! I’ll make you pay!”

In a related story, I called up US Representative Will Hurd, (R-TX) whose Congressional district shares the nation’s longest border with Mexico – from El Paso to San Antonio – to ask him about who is going to pay for our promised “Border Wall” with Mexico. Unlike the interaction with my neighbors, this call actually happened.

Hurd stands by his earlier statement that the Trump-promised border wall is a “3^rd Century solution to a 21^st Century problem.”

“I still believe that building a wall from sea to sea isn’t the most effective way to do border security,” Hurd told me.

I asked about funding the wall, something that ultimately falls to Congress.

The Trump administration managed to secure $20 million in a budgetary move called “re-programming,” to allow the Department of Homeland Security to study different potential wall designs. One prototype under study is a 30-foot tall structure, which Hurd says would take someone around 4 hours to breach.

The real wall, however, would cost a lot more than the $20 million in starter funds.

While Trump has consistently promised a $10 to $12 billion price tag, independent estimates range from $25 billion to $67 billion, with an article in the MIT Tech Review settling on $40 billion.

That kind of money can’t be gotten through budgetary shuffling known as ‘reprogramming,’ but rather requires Congressional support. At the end of April Trump threatened to hold up a 2017 appropriations bill – needed to keep the federal government from an imminent shut-down – if Congress did not set aside $1.4 billion to begin constructing the wall. The Republican Congress called his bluff, and the wall-funding request dropped for 2017. Maybe it will be back for negotiation in 2018?

Trump says it will. “Eventually, but at a later date so we can get started early, Mexico will be paying, in some form, for the badly needed border wall.” He tweeted. And then, “Don’t let the fake media tell you that I have changed my position on the WALL. It will get built and help stop drugs, human trafficking etc.”

In the meantime, spending billions this way makes no sense to Representative Hurd. As a former undercover CIA officer deployed to Iraq and Afghanistan, he’d advocate a smarter combination of technology, human intelligence, and cooperation with our Mexican counterparts.

“There’s 19 criminal organizations that we’ve identified. Let’s improve our intelligence on those groups and stop them before they get to the border. Ultimately, border security is important, and we need to do a better job.” See, that’s a reasonable, informed, approach.

Who would pay for this wall? We already know Trump’s repeated claim that Mexico will pay.

Former Mexican President Vicente Fox has a colorful way of expressing his country’s attitude. “We’re not building your fucking wall!” he has repeatedly stated to every media outlet on the planet. Unlike statements made by my own president, I believe him. Every Mexican schoolchild remembers 1848, even if most US residents do not know what happened that year. Mexico will no more pay for Trump’s border wall then the US will pay reparations to the Queen of England for territorial and property losses incurred between 1776 and 1783.

Realistically speaking, either US taxpayers pay directly for the wall, or US consumers pay for this indirectly through higher taxes on imports from Mexico. To do that, of course, we’re talking about big changes in the North American Free Trade Agreement (NAFTA), something President Trump also advocates.

Hurd disagrees with that approach as well. “NAFTA is important, end of story. The US, Mexico, and Canada, we build things together. We should be thinking about how we achieve more of this. There are ways to improve it…Updating NAFTA could be a model for free trade agreements around the world. We should be talking about how to strengthen NAFTA, not pull out of it.”

As for me, I’ve driven hundreds of miles through Hurd’s district, from Big Bend to San Antonio on I-90, noting the small towns that have already suffered as a result of stricter border controls. On that long, lonesome highway you see a preview of the economic devastation a border wall – or pulling out of NAFTA – would cause in Texas.

I have tried hard to find serious analysis of the cost of the border wall, serious methods of paying for it, and serious economic impacts of the wall. It cannot be done. The subject resists serious thought. It’s a deeply unserious promise made by a deeply unserious person. But here’s the serious problem for Trump with all his “border wall” talk. When you expose yourself as a bully and a liar on your single most important campaign promise, people remember. Mexico is on to Trump and is calling his bluff. Congress is on to Trump and is calling his bluff.

In the meantime, picture me on my big step ladder every night, megaphone in hand, shaking my fist at my neighbors’ weeds. “You’re gonna pay!” After the first few months, the neighbors stopped paying attention. But I know my starting position is a strong negotiating stance. I’m good at making deals. And people like me.

Please see related posts:

Trump – Sovereign Debt Genius

Trump – Threats to Financial and Economic Security

Trump – We need principled Republican leadership

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April 17, 2017

100 Year Bonds In The Trump Era

The United States does not currently issue bonds with maturities longer than 30 years, but the idea of super long-dated national debt is back in the air. Long-dated, as in bonds due in 100 years. One reason 100-year bonds are kind of neat is that nobody alive right now ever needs to worry about paying the principal back!

Setting snark to the side (for just a moment), Treasury Secretary Steve Mnuchin, in an interview in December, appeared open to the idea of 50-year or 100-year bonds, floated by financial newspaper Barron’s back in November 2016.

Barron’s followed up in February with the report that Mnuchin asked his staff at the Treasury department to look into the pros and cons of 100-year debt.

Some of the best reasons for the United States to issue 100-year bonds fit reasonable, prudential, debt-management principles. Other reasons facilitate wackier scenarios. I’ll describe both.

But first, who would buy 100-year bonds from the United States? Buyers are not typically individuals like you and me, but rather institutions that have to make payouts far in the future.

Barbara Mckenna, Managing Principal of Longfellow Investment Management Co, a Boston-based firm managing over $9 billion in assets, noted to me last week that buyers of ultra long-dated bonds tend to be pension funds and life insurance companies, institutions which need assets to match their liabilities, stretching into the future for many decades.

These were the buyers for Austria’s 70-year debt issued in late 2016 at a rate of 1.53 percent. Ireland and Belgium both issued 100-year bonds earlier in 2016 presumably to that type of buyer as well, both reportedly with a 2.3 percent coupon.

“Feed the ducks while they’re quacking,” we’d often say in my old bond salesman days, when we issued new debt. There’s an element of that to justify the US issuing 100-year bonds. Right now, the pension funds and insurance company ducks would happily quack for extremely long-dated US Treasuries, so we might as well satisfy their hunger.

The three most legitimate reasons for the US to issue ultra long-term debt are:

To ease “rollover” risk,
To fund ourselves at historically low rates, saving money, and
To facilitate long-dated corporate bond issuance

First, if your country issues mostly short-term debt, as ours does, the “rollover” problem happens constantly. If you have, on average, more long-term debt including for example 100-year bonds, you’ve gone some way toward relieving your rollover problem.

Next, the cost-savings from long-term low rates could be significant. A few numbers can help put this into context.

The federal government currently owes approximately $19 trillion to all creditors, and paid $433 billion in interest on its debt last year.

The federal government pays 2.26 percent on all of its debts, as of March 31, 2017, an extraordinary low rate.

15 year ago, the average interest rate on long-dated bonds was 8.27 percent.

10 years ago, the average interest rate on long-dated bonds was 7.55 percent.

Right now a 100-year bond – depending on a variety of factors such as the size of issuance and the demand from investors – could cost something like the current rate on 30-year bonds, or approximately 3 percent per year. McKenna agreed with me that a 100-year bond “probably would not be dramatically different from a 30year bond in terms of yield.” It might cost the US government a bit more, although it also might cost less.

While a 3 percent 100-year bond would represent a higher rate than the US currently pays on average over all, locking in that rate for a long-time probably offers big interest cost savings over the long run.

We’ve got close to $2 trillion in long-dated bonds outstanding currently, due between 10 and 30 years from now. To point out some simple math (albeit simple math with a lot of zeros involved) a 1 percent drop in the average interest rate on a trillion dollars in long-dated bonds saves $10 billion per year in interest payments.

The third reason for 100 year bonds – and this reason appeals more to bond nerds like me, concerned with smooth-functioning capital markets – is that private corporations can issue more long-dated debt if there are long-dated US Treasury bonds to compare them to. Bond traders really like corporate bonds to match the length of government bonds, as it makes hedging and trading those corporate bonds much easier.

So 100-year US Treasury bonds aren’t crazy, could be issued affordably, and offer some capital market advantages.

Now, you’ve been patient with me and my bond math, so let’s get a little crazy. For readers interested in historical bond trivia – and yes, I’m talking to both of you – ultra long-dated bonds have interesting ties to global catastrophes.

England issued perpetual bonds to finance itself during the Napoleonic Wars, and 100-year debt to finance itself during World War One.

I think of this global catastrophe and 100-year bonds because a time may indeed come in the medium-term future when we have trouble rolling over our debts.

If we were in a shooting war with China – or even just a nasty trade war – for example, we might have trouble with the fact that Chinese institutions own approximately $1 trillion of US sovereign debt. Heck, if we get into a shooting war with North Korea this week or next week we might face rollover trouble, as a signal from Chinese institutions displeased with our unilateral military actions.

Fortunately, our current President has deep experience with the inability to roll over debts. He ran his casinos into the ground this way. Given his experience, he stated his plans for federal debt issuance while still a candidate, just last summer.

“I’ve borrowed knowing that you can pay back with discounts. I would borrow knowing that if the economy crashed, you could make a deal.”

Oh, sweet mercy, please, no. But then a few days later candidate Trump clarified, default isn’t really necessary. “People said I want to go and buy debt and default on debt. I mean, these people are crazy. This is the United States government.”

I was starting to feel better.

But then he continued,

“First of all, you never have to default because you print the money, I hate to tell you, okay, so there’s never a default.”

Ah, yes. Thank you Mr. President for clarifying your views on sovereign debt.

Dear Treasury Secretary Mnuchin: Can we please issue massive amounts of 100-year bonds quickly before anyone re-reads these quotes and thinks about them too closely?

A version of this post ran in the San Antonio Express News and the Houston Chronicle.

Please see related posts:

Trump and the coming Financial Crisis

Trump: Sovereign Debt Genius

Book Review: The Making of Donald Trump by David Cay Johnston

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March 8, 2017March 8, 2017

Book Review: The Making Of Donald Trump by David Cay Johnston

David Cay Johnston covered Trump as a journalist for thirty years, in the course of reporting on the Atlantic City beat. He presents in The Making of Donald Trump a greatest hits of the President’s business life. And by greatest hits, I actually mean the lowlights of his behavior with women, with business partners, with lawsuits, with his employees, and with the press.

To point out that President Donald Trump is primarily a con man with easily observed personality disorders is relatively straightforward, given what we’ve witnessed of him as a Presidential candidate, and now as President. I think the time for outrage at each new Tweet or each new attempt to subvert the best traditions of the Republic is past. We know what he is. We know he will try his best to break this country’s constitutional traditions.

But to play armchair psychiatrist for a moment, Trump is not, primarily, evil. He is a deeply insecure person unencumbered by the moral boundaries which limit the rest of us. When faced with his unrelenting narcissism, a yawning chasm of need, he chooses the fastest route to a short-term fix for that sickness. Johnston’s book is a history of this sickness, in easily digested, well-researched, chapters.

Sometimes his sickness means doing business with noted mob associates. Occasionally it means cutting family members out of their inheritance. Often it means threatening lawsuits against journalists, newspapers, and other perceived enemies who jangle the nerves of his insecurity. Often it involves an unrelenting thirst for vengeance. Sometimes it means screwing over your bondholders. Historically it has involved inventing hotel prizes, and then hiring people to award them to you, as a 4-year old child would do, if given the chance. It includes cutting corners on building costs by hiring illegal labor, working under dangerous conditions. It means running a scam University making false claims and preying on financially vulnerable people.

Sometimes it means calling up gossip columnists, pretending to be a PR man, and bragging about how Madonna or Carla Bruni or some other hottie of the day is lusting after Donald Trump. Sometimes it means not actually trying to legitimately attract a woman’s attention, and just grabbing them by the pussy.

Johnston published this book in August 2016, after Trump’s nomination by the Republican Party but before the November election. He tried to do his patriotic duty of warning the country about a con man he’d observed closely for decades.

Anyway, life is going great here in the United States since the election, OTT.¹

Please see related posts:

Why I Can’t Sleep At Night (post Trump election)

Trump Part III – The Authoritarian Use of Security Crises

Trump Part IV – The Authoritarian Use of Economic Crises

Trump Part V – The Constitutional Crisis

Trump Part VI – The Need For Principled Republican Leadership Right Now

The Fall of The Roman Republic by Plutarch

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