The Donald Trump candidacy has had me stumped as to what he is up to. Many observers believe his candidacy is being powered by some third party (Democrat or Republican leaning), and I can subscribe to that theory. But what’s in it for The Donald?
The one thing of late that has stood out as odd to me is Trump’s focus on his net worth. He has repeatedly gone out of his way to talk up his net worth – so much so that I think there is more to this bluster than just ego.
So I have a theory on maybe whats going on here. Stay with me here as I do some math. Lets say Trump has 10 buildings with a true market value of 1 Billion (10 buildings at 100 million each), each with a mortgage of 90 Million. That would give his net worth in these buildings 100 million (1 billion – 900M in debt). Lets say his friend wants his help in getting someone elected for President. His friend invests 51 million for a 1% equity share of these office buildings, along with a personal services/media consultancy agreement with Mr. Trump (an agreement valued at say, 1 million).
Once this agreement is signed, the “market value” of Trumps 10 buildings is now 5 Billion (50 million * 100) – the accounting theory that if one person would pay 50 million for 1% share, there are 99 other people out there willing to pay 50 million each for the rest of the equity). Trump instantly gained 4 billion in net assets.
Trumps next move? Fleece the silly bankers that will loan him a few more billion against his buildings, then when the market value goes south squeeze the bankers with threats of defaulting on the loans and giving them the buildings. And as a political candidate, he has the potential of distributing future political favors – and what banker could pass up on that perceived opportunity?
So when Trump is bragging about his net worth – I think he is talking to his bankers – that’s his end game – with the side benefit of having a grand time making headlines, running a reality show, and pretending to run for President.
Meanwhile, Trump’s friend gets to influence the political process in a brilliant use of media, without having to deal with a political action committee or any election regulations (well.. whats left of them).
So if my theory is right, and the main motive for Trump is to up his net worth in order to fleece stupid bankers by getting them to loan him money against ethereal assets, he may have my vote.