Diary

WHAT DO TRUMP'S BANKRUPTCIES SAY ABOUT HIS ABILITY TO MANAGE THE ECONOMY

The real test of business acumen is not how well a company does in good times, its how well it does in bad times. Speaking from my personal experience as a former Apple Share holder, for example, I am pretty confident that if Steve Jobs hadn’t had some fairly conservative fiscal ideas, Apple wouldn’t have survived the dot.comm crash to become one of the wealthiest companies in the world today. Just having good ideas is not enough. Steve Jobs didn’t think that companies should take on a lot of debt, so when the bad times hit the computer industry in the 90s and companies were going bankrupt all around it, Apple had enough cash reserves and its debt was low enough that it survived.

We all know that the next president is going to inherit an economy with a lot of rot in it. Rot that has been papered over by the fed keeping interests rates low and government agencies which have redefined unemployment. But, paraphrasing Margaret Thatcher, eventually you run out of other people’s money. Mr. Trump’s business experience suggests that he may have a lot of good ideas for product and places but he doesn’t know how to manage a company in distress. Y ou can use our bankruptcy laws to get out from under if you are managing a company, but you can’t do that with the U. S. government

All of the bankruptcies Trump companies filed were Chapter 11 bankruptcies where the company survives. What the pundits don’t tell you is that the bankruptcy judge has the authority to break contractual obligations. In a Chapter 11 all of the creditors get pennies on the dollar and there is not really any recourse. When the company recovers, the new investors and lenders, benefit, but the old creditors are just out of luck. They never get paid. If anyone is enterprising enough, and that may be me, they can go online and look at the actual files at a site called PACER. It is a U. S. court website that gives you online access to most of the documents filed in most federal courts in about the last 20 years. The subscription is free, you only pay about about 10 cents a page for whatever documents you download. It might be useful to look up some of the people who got stiffed by Donald. I don’t think he started out with the intention to stiff people but he apparently took on a lot of debt for these companies and when the economy went into a slump they couldn’t pay their bills. So the creditors got stiffed. That is how it usually works. Here is a link to an article that outlines his four bankruptcies: http://www.politifact.com/truth-o-meter/statements/2015/sep/21/carly-fiorina/trumps-four-bankruptcies/