Donald Trump’s 1989 Interest Income Raises Eyebrows
Author: Greg Valliere
May 9, 2019
LOST AMID THE BOMBSHELLS YESTERDAY — the contempt citation against William Barr, the subpoena of Donald Trump, Jr., and the prospect of a trade war by tomorrow morning — is perhaps the most explosive development of all: reports that President Trump had $52.9 million in interest income in 1989. To say this has raised eyebrows is an understatement.
TRUMP WAS FAMOUSLY ILLIQUID, always short of cash and similar assets, and usually reported very small amounts of interest income — except in 1989. This has prompted a frenzy of digging by reporters amid speculation in Washington about what kind of asset (and from whom) could have generated interest income of $52.9 million. Trump has been heavily dependent on Deutsche Bank loans; the German bank has been repeatedly implicated in money laundering schemes.
AT THE VERY LEAST, THE NEW YORK TIMES BOMBSHELL explodes the myth of Trump as a master businessman; virtually all of his ventures lost him — and his backers — enormous amounts of money. Whether this will hurt him politically is unclear; maybe it won’t — hosts on Fox and Friends congratulated him yesterday for his acumen, using tax laws cleverly.
TRUMP ASSERTED that New York real estate developers sought tax write offs “for sport,” but this could annoy his blue collar supporters who also hate taxes but actually have to pay them. As for the other developments yesterday, Donald Trump, Jr. won’t testify — it’s a perjury trap and he knows it. And a motion to censure William Barr would never pass in the Senate.
BOTTOM LINE: There’s only a faint chance that Trump (or Barr) will be impeached; even if they are, the Senate would never convict. But we think the $52.9 million in 1989 interest income raises some serious issues, giving the House a more credible argument that Trump’s taxes should be released. There’s a very good reason why Trump so adamantly refuses to release his taxes — they’re the smoking gun.
THE BIGGER STORY TODAY FOR THE MARKETS OBVIOUSLY is the threat that steep new tariffs will be imposed on China at midnight tonight. We still think there will be a deal — eventually — but Trump’s comments last night at Florida campaign rally were not encouraging. China “will be paying,” he said, for reneging on provisions that had already been agreed upon.
WE’RE AT THE STAGE where personal diplomacy will have to play a role, as Trump meets this weekend with Vice Premier Liu He. The spin after the meeting will be that a deal is close, but we’ve heard that before. Both sides are far apart on a handful of issues, and there are hard-liners in both countries who are unwilling to budge. A final deal, with all details resolved, probably won’t come until June — at the earliest.
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