We live in interesting times. Our current (for the moment) President is enveloped in so many scandals that they have backed up into a paralyzing logjam of corruption. Think of the single semi-valid case that crippled the Clinton Administration, and then imagine a White House with dozens of moral, ethical and legal outrages of a far more consequential nature. That simple question of scale becomes a force of its own, large enough to bog down efforts to bring any individual matter to justice.
Two days prior to his inauguration, the President of the United States paid out a $25m settlement to his fraud victims. He is trying to claim executive immunity to escape the consequences of years of sexual harassment. He is in daily, public violation of laws banning executive branch officials from making money selling public office for foreign payments. There isn’t room in a blog post for even a cursory list of the Trump scandals that would have landed any other President in impeachment or prison.
If he is ever to face justice for his actions, focus will be key. Otherwise he and the rest of his clan will die of old age, free to walk the streets, still more or less rich, with a thousand court cases still pending and stalled.
Those on the left and right who are serious about protecting our public institutions should narrow their focus to Trump’s ties to Russia. Here’s why.
The Trump family’s decades of business dealings with Russian figures in business, crime and government (they tend to overlap) is key to understanding and thwarting his plans. Those ties form the most serious danger to our national interests rising from his administration. His sexual harassment and business frauds are nasty and depressing, but his relationship to an enemy power carries the potential to compromise our interests in ways that cannot be repaired. Uncovering those ties is our highest national security priority.
Congress is not yet serious about pursuing this question. You will know they are serious when they subpoena Trump’s tax records. Until then they are just buying time for Republicans to pass a few bills while the President’s signing pen is in the fat little fingers of a putatively Republican figure. We won’t have the evidence necessary to build a legally persuasive case against Trump until the secrecy that shrouds his business dealings is removed.
Trump is an unusual political figure in that he has no politics or ideology whatsoever. The Trump machine runs on two fuels, greed and debt. Understanding his current policy positions and predicting future ones starts with an appreciation of his business and its intricate web of obligations.
The Donald is not the CEO of a corporation in the traditional “Fortune 500” sense, but rather the head of a shady family business of unknown size and scope. He brands himself as a business genius, but it would be valuable to remember that his primary business is real estate development. That’s a critical distinction because real estate, especially on a global scale, operates in ways that are very different from more conventional enterprises.
It is extremely difficult to generate positive cash flow from real estate. Property is, by nature, a slow investment. Large-scale real estate investors usually match one of two profiles. They’re either people who are more concerned with wealth preservation than with cash flow – usually heirs of a large amount of capital. Or they are wildly corrupt, willing to take advantage of certain unique characteristics of the real estate market for enormous, though often dangerous profits.
What are those “unique characteristics” of the real estate market? First of all, making serious, fast money in real estate usually hinges on aggressive leverage. You make big profits in real estate consistently by investing other peoples’ money and limiting your own exposures. For example, you might borrow huge amounts of money from investors, make poor real estate investments, and pay yourself and key associates exorbitant salaries and bonuses while values decline. Then at some point you either take the business entity into bankruptcy (while keeping the money you made), or you find someone who will take those investments off your hands. We’ll come back to that “someone” later.
Among other things, that model means these businesses are constantly burdened by enormous debt. A crucial criteria for success is the developer’s skill in assembling the rosiest possible balance sheet to attract new capital. Building a brand big enough to distract potential lenders/investors from a close reading of your books can bring handsome dividends. Branding is a vital element of the grift. It attracts the right kind of investors and the right marks on which to dump poorly performing assets.
Whenever the Trumps try to venture beyond property development into a business with normal market constraints, their grimy shtick earns them a big fat failure. From cologne to concrete, it is hard to find a conventional business venture subject to conventional market forces that they haven’t ruined. The Trumps are not very good at businessing, but they are very good at hiding what they do for a living.
What happens when you can’t succeed in normal business ventures and you can no longer distract potential real estate investors from the odor rising from your otherwise rosy balance sheet? You can still make money if you find the right partners, people who are less concerned about your solvency and more impressed with your [ahem] creativity.
What if you found a business where your talent for generating a positive personal balance sheet from negative corporate cash flow became a virtue? Real estate development is a great place to launder money, especially for money that needs to flow across borders. This is where we start to meet the kind of “someone” who is particularly valuable in disposing of junk properties. And this is where the potential ties to Russia become very important to the Republic.
Even in the US, controls on cash investments in real estate are relatively loose compared to the constraints encountered in other investment channels. This creates opportunities. Conventional US corporations and your ordinary, risk-averse American real estate investors are generally reluctant to help corrupt oligarchs and international mafia figures launder money through property deals. It is, after all, a crime, but somebody has to do it.
What respectable American investor is going to help an Azerbaijani oligarch wash investments from the Iranian Revolutionary Guard into normal, legitimate commerce? No one, of course. But the Trumps will do it.
In the midst of the worst real estate collapse in the nation’s history, who is going to take a $40m white elephant off your books at a 100% profit? A Russian oligarch. And what will he do with the property you so carefully “improved” to justify the 100% write-up? Immediately tear it down.
Though Trump repeatedly insists he has no ties to Russia, he has been deeply involved there and maintained extensive business ties to Russian sources since at least the late 90’s. How deep do those ties go? It is impossible to say for sure because Congress, the Republican Party, and American voters have allowed him to keep his business dealings secret.
We do know that Russian investors have been significant funding sources for his projects. We know that Bayrock, a “business” based in Trump Tower with significant investments over the years in Trump projects is run by a Russian-born mafia figure with what can only be described as a “colorful” history. For almost two decades Trump projects all over the globe have proceeded with considerable Russian investment. We know that the family launched its blundering Trump Vodka business from Moscow, where Trump himself was visiting a “Millionaires Fair.” We know he partnered with a Putin-connected Russian oligarch on his smarmy beauty pageant deal in Moscow.
We know that his campaign had a strange, complex, and deep network of ties to Russian intelligence over the course of the campaign. We know that Trump’s Attorney General lied under oath about his meetings during the campaign with the Russian Ambassador, including a meeting that occurred at the RNC. We know that staff members and even family of cabinet members opened back channels of communication with the Russian government during the transition. His campaign manager, Paul Manafort, is wanted for questioning in Ukraine for his business ties to the country’s Putin-backed former president.
We know that the Russians badly wanted Trump to win and leveraged national intelligence assets to help him in the campaign. Basically, we know enough to say with authority that his denials of Russian ties are lies. So, what is he hiding with those lies?
There is the obvious, publicly disclosed explanation for Trump’s Russia lies. He has been compromised by Russian intelligence deeply enough that he does not feel he can act against them or discuss his connections. Salacious details explained in the “Russia dossier” might be true, but they seem too superficial to explain Trump’s slavish adherence to Putin’s agenda or the way he has packed his administration with Putin favorites. It makes more sense to expect that the answer is hiding in the dull ledgers of Trump’s businesses.
This is a Congress and administration that has struggled to accomplish the simplest legislative tasks and been torn to shreds by more complex challenges. But within days of inauguration new legislation was passed that rolled back provisions blocking companies from foreign bribery. On matters of true importance, the Trump administration reliably delivers. Apparently, the ability to bribe foreign officials without consequence is a matter of such concern to this administration that it had to be accomplished immediately while every campaign promise faltered. We should be asking why.
We find ourselves in an unusual situation, one in which our President’s sexual assaults, perjury, housing discrimination, mafia ties, fraud, unapologetic insults to combat veterans, his seemingly endless string of business failures, and his round the clock, effortless and even pointless lying all merge into a distracting static. What would be impeachable ethical lapses in any normal administration are reduced here to distractions. It is of paramount importance that we discover who owns this horrible troll in the White House and neutralize their influence over our government.
Until Congress decides to follow the money, they are just spinning their wheels and playing for time.
So what happens first? Some rogue hacker group steals the tax returns and releases them? The GOP decides in the next year that Trump’s usefulness no longer outweighs his liabilities and they make a secret resignation deal/ sign on to an investigation that subpoenas the tax returns? 2018 is a massive backlash wave midterm and impeachment proceedings start in Jan 2019?
There is an interesting lawsuit that’s been filed by Twitter in respnse to a demand by the US government that it release the name(s) of those who are operating from a Twitter account that is hostile to Trump. There are real freedom of protected speech at play here. This NYT article spells out the risks very well.
https://www.nytimes.com/2017/04/06/technology/twitter-sues-the-government-to-block-the-unmasking-of-an-account-critical-of-trump.html
And then there is this one:
https://qz.com/950313/turkey-is-preparing-to-vote-on-a-constitutional-referendum-that-gives-president-recep-tayyip-erdogan-unprecedented-power/
Here is a good way to finance real-estate projects with cheap money: EB-5 green cards: https://www.bloomberg.com/news/articles/2017-03-26/rich-chinese-race-to-fund-kushner-tower-other-high-end-projects
So is this is going to be like the 90’s, when we surprisingly found out marital fidelity had nothing to do with political party?……………
http://nymag.com/daily/intelligencer/2017/04/devin-nunes-steps-aside-from-russia-investigation.html
Over there-SUSAN RICE
Great piece. I’m in a hurry, so my only comment is that your forgot to mention that the Congressional GOP is on a huge power trip right now and that they are huge hypocrites. They will do nothing to jeopardize that. Just like the statement Congressman Brady’s staffer used to put down Mary.
I openly laughed at her when she made that comment. I replied, “Really? You think I buy that answer? Tell that to your other constituents, not this lady. That’s BS.”
“Congress is not yet serious about pursuing this question. You will know they are serious when they subpoena Trump’s tax records. Until then they are just buying time for Republicans to pass a few bills while the President’s signing pen is in the fat little fingers of a putatively Republican figure.”
Chris, I think you could have condensed this post down to that couple sentences and left it at that. The players with the big boy pants just pushed bannon out of the NSC, and I am pleasantly shocked to see he is losing the control over the puppet tyrant. I figured that the u.s. was headed for a disaster in Iran (and the middle east in general), but looks like more sensible brains will prevail.
That being said, the damage this cabal will still wreak on the country and planet cannot be understated. Even when the people in charge had made the most of the useful idiot and then turn Congress and the Senate loose on him, things will still be awful. The subsequent pence team is every bit as evil the bannon/trump crew, and far more capable to execute their goals.
Removal of abortion rights, global warming, gerrymandering, destruction of the environment, deregulation of the financial industry, more privatization of the prison system (and creating the necessary supply of criminals for it), all these things will accelerate with the clown prince removed, and we will all pay the price, 2 years, 5 years, 10 years down the road.
Compared to the effects of Global Warming, voting rights, etc. take a distant second in importance. Friedman in a column talked about the year 2030, when a billion more people are expected to populate the earth. The oceans will be over fished. i heard on NPR a discussion about sea levels. By the turn of the century, the southern third of Florida could be uninhabitable.
and, our Republican friends have their heads up the butts, pandering to the dumbest and greediest of Americans.
But, there is not much if anything that i can do about it. 53% of white women voted for trump, and one must conclude, Republicans in general. There is no justification for that. none!
I assume all of us have seen this editorial:
“Still, nothing prepared us for the magnitude of this train wreck.”
http://www.latimes.com/projects/la-ed-our-dishonest-president/
When you say ‘Hey __hole, Florida is going to be underwater’, what do you think the listener hears? You not understanding doesn’t mean the problem is them.
Republicans are playing a dangerous game – Playing coy with Trump – who they really despise, in trade for what they have sought for decades – a totally conservative agenda. Hoping their base will continue to blindly support any initiative they float, believe anything they say, and once more vote them back into office. What could possibly go wrong with any of this?
http://gladwell.com/open-secrets/
Opps-meant for the Enron comments at the bottom of the thread
Trump is Enron and his tax returns would reveal the mystery, which ties to the previous post where we discussed the importance of ‘experts’. Trump is like increasing CO2 in our atmosphere and many of us apparently don’t find a low enough ‘p’ to worry about either…………………
Those of us paying attention on both the left and right recognized this confidence artist a mile away, and are rightfully worried about the potential damage to our democracy that someone of this type of character can do with the reigns of power. After mountains of evidence of poor character have accumulated, to me the main source of worry is that his approval rating is still in the 30% range. WHO ARE THESE 30%?? How is this not 0%? And why does their vote count as much as ours, and in some cases more?
This tells me that a still-large percentage of the voting population does not care one whit about income inequality, global warming, collusion with a foreign power, corruption, nepotism, attacks on the fourth estate, or weakening of the checks and balances between the 3 branches of govt. How did those people reach that place in their hearts and minds where this is acceptable? I used to think it was fear of brown people or what bathroom someone uses, but can that really be the full explanation?
That leaves us with what happens after 45 ultimately crashes and burns. I don’t see really anything getting better. The electorate may be too far gone to save us.
To be fair, if all of those scandals emanating from 45 reverse direction and start loading back on him, he’ll be too busy fighting off sexual harassment, corruption, and fraud suits to whip votes for tax reform bills and other Republican unicorns, thus leaving them with nothing left to focus BUT tax returns.
So, whereas those various things are bad for keeping the news digestible, it’s not like they’re pure fog and mirrors — they are all based in real claims by actual people attacking 45 in diverse and creative channels.
This is also before we account to the fact that, frankly, Trump suits are already becoming a cottage industry. I can imagine some equally feckless, ambitious lawyer seeing the literally hundreds of millions pouring into the ACLU and the multimillion dollar settlements to come and coming to think, “You know… there’s money here.” Like gold-diggers to the Kennedy’s, ambulance chasers to the Trumps.
At least I like to imagine.
Powerful piece, Chris. I’ve been reading everything I can find on the Trump/Russia connections. You didn’t note this but the shameful actions of Devin Nunes in his role as chair of the House Intelligence Committee should be grounds for removal from office. But, not a peep from the GOP leadership. In the Senate, their investigation appears to be more solid but it is still “in-house and in-party”. Then there is FBI Director Comey’s investigation. I confess to a loss of confidence in his good judgement and impartiality but having no better independent effort to follow, I hope he and his team are able to conduct their investigation unobstructed. In the meantime, so much harm is being done to our country and its institutions.
Trump’s tax returns have always been able to be requested through the House Ways and Means Committee without the need for a subpoena (unless he refused). When I asked Congressman Brady’s staffer about why he did not do so, the answer I received was: “You wouldn’t want us to go on a witch hunt….no McCarthy hearing abuses”. BS.
Follow the $$ is exactly correct. I have more confidence in our free press in digging out the sordid details of this man’s shady life than I do in either the Senate Committee or Director Comey. I certainly hope to be proved wrong. This situation cries out for the creation of a bi-partisan, independent commission led by a non-partisan special counsel. Ask yourself why Republicans aren’t supporting the obvious, best way to ensure a fair investigation.
Great piece. My only quibble would be the assertion that real estate is unique. I was more than causally involved with Enron. The parallels are pretty striking. From balance sheet manipulation, to the callus and utter rejection of the notion that the primary principle of business is to create value, is identical. Manipulation of debt does not create value.
Some see the accumulation of wealth as the primary sign of success in business. This used to be a somewhat valid point of view. It hasn’t been for a long, long time. Those of us who actually did manage to accumulate a little bit without ever screwing anyone, without ever making promises we didn’t keep, and without selling customers vaporware, see the rest as simple posers, charlatans, frauds, and con artists. They deserve nothing but our scorn.
You’re right, but think for a moment about how incredibly sophisticated the Enron fraud was. What I’ve seen in real estate is so crude.
Yeah – that’s fair enough. But the selling of Wall Street on the fact that they had broadband expertise enough to deliver impulse pay-per-view nationwide on the premise they owned some microwave links on the pipeline rights of way, was anything but sophisticated. The list is long, but Enron had hubris in spades. This has a familiar ring as well.
Yea, that was a good one.