Desocupado Lector,
May. 13th, 2019 03:17 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
timeletsHow would we make a case for Trump being a great businessman?
1. Entrepreneurship is inherently risky, with failure being the most likely outcome. Moreover, real estate entrepreneurship, unlike e.g. tech or pharma, is a leveraged business where failure can result in catastrophic losses. Therefore, risk management is essential for success: ideally, you want to own the upside and transfer the downside to another party.
Trump gets an A for that because both in the 1990s and in the 2000s he managed to transfer losses to his investors, while retaining control of his most valuable properties. He also used bankruptcies and threats of bankruptcy to avoid potential personal financial ruin.
2. Financing and cash flow are essential to real estate entrepreneurship. Throughout his career, he showed that he can obtain massive loans for his projects. Furthermore, unlike Fred Trump, he got loans from commercial, rather than government sources or under government guarantees. Remarkably, he was able to obtain commercial loans even after a series of business failures in the 1990s. He's also been quite good at refinancing and/or litigating his loans, thus avoiding asset liquidation. Solid B.
3. Retaining upside earnings and cash flows (see pp. 1 &2) can present a significant problem in high-tax jurisdictions, such as New York. As the available tax information shows, Trump successfully used existing and novel tax optimization techniques to pay very little or no taxes. A+.
Overall, he can be legitimately viewed as a highly successful businessman, although most of his methods would be considered unethical by people outside of his industry.* As always, he still might get into some legal trouble, but his core assets are not in danger.
* “Trump says he wants to run the nation like he’s run his business. God help us. I’m a New Yorker, and I know a con when I see one.” - Michael Bloomberg.
1. Entrepreneurship is inherently risky, with failure being the most likely outcome. Moreover, real estate entrepreneurship, unlike e.g. tech or pharma, is a leveraged business where failure can result in catastrophic losses. Therefore, risk management is essential for success: ideally, you want to own the upside and transfer the downside to another party.
Trump gets an A for that because both in the 1990s and in the 2000s he managed to transfer losses to his investors, while retaining control of his most valuable properties. He also used bankruptcies and threats of bankruptcy to avoid potential personal financial ruin.
2. Financing and cash flow are essential to real estate entrepreneurship. Throughout his career, he showed that he can obtain massive loans for his projects. Furthermore, unlike Fred Trump, he got loans from commercial, rather than government sources or under government guarantees. Remarkably, he was able to obtain commercial loans even after a series of business failures in the 1990s. He's also been quite good at refinancing and/or litigating his loans, thus avoiding asset liquidation. Solid B.
3. Retaining upside earnings and cash flows (see pp. 1 &2) can present a significant problem in high-tax jurisdictions, such as New York. As the available tax information shows, Trump successfully used existing and novel tax optimization techniques to pay very little or no taxes. A+.
Overall, he can be legitimately viewed as a highly successful businessman, although most of his methods would be considered unethical by people outside of his industry.* As always, he still might get into some legal trouble, but his core assets are not in danger.
* “Trump says he wants to run the nation like he’s run his business. God help us. I’m a New Yorker, and I know a con when I see one.” - Michael Bloomberg.
