Wednesday, July 19, 2017

"Set Aside Putin And Follow The Money: A Russian Expert's Theory Of The Trump Scandal"

At Vox...but actually pretty interesting/plausible.


Anonymous Anonymous said...

The problem with the narrative of Trump being financially beholden to Russia is his total debt (of which I don't know how much is owed to Russia, I believe a lot of it is with Deutsche Bank, actually but whatever) is actually very modest. He is leveraged at something like 1x EBITDA (according to this he has $265 million in debt to $300 million plus in personal income, so not quite a EBITDA metric but close enough). In comparison, a lot of energy E&P companies, many of which are classified as distressed and are genuinely operating in favor of creditors, have leverage metrics of something like 4-6x EBITDA, and sometimes even more.

This basically means that Trump could pay off his debts by simply retaining a single years' operating income. That is child's play, and he probably won't do it because the interest on his debt currently doesn't exceed the return he can get on other ventures and he will have little trouble refinancing, given he can collateralize it with only a small fraction of his assets.

There are all sorts of financial carrots that could be put in Trump's path because of his business interests, but the idea that some of his debt might be held by Russians and thus he is secretly controlled by Moscow is really financially unjustified.

10:34 AM  
Blogger Winston Smith said...

Thanks,'s important, *inter alia*, to remind me that I don't know what I'm talking about in this context.

12:02 PM  
Anonymous Anonymous said...

This goes back to anti-Trumpery in journalism. I don't think a lot of financial analysts would look at Trump's balance sheet and think he is in remotely any trouble with creditors. But the people who cover this are political journalists, and they are only interested in "connections". The substance of which is often very thin.

That said, Trump is likely really concerned about people looking into his finance, but not because of Putin lurking in some dark corner. There are tons of games real estate investors play to avoid taxes. The law is really generous in how you can value your property (to avoid property taxe) and take depreciation charges (to offset income taxes). No chance Trump hasn't been playing fast and loose with that.

12:21 PM  

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