23 May 2017

How Will the Trump Presidency End?

As I mentioned in my previous post, I believe Donald Trump will resign before the end of his first term.

And he will do so not because he is guilty of obstruction of justice (he is) but because his grift deal with the GOP will have become unworkable.

You know the one whereby they allow him to license his name to any shady businessman in the world, conflict of interest be damned, and he, in return, allows the GOP to have a massive tax cuts for the rich and to shrink health care and to destroy social safety net for the poor.

I believe that, when his long list of financial shenanigans, including his dubious money laundering arrangements with Russian oligarchs are revealed, his ability to make money off the presidency will be severely limited.

Since this will also make him the story, as we saw in the last couple of months, it will hamper his legislative agenda. You can't give goodies to your one percenter friends if everyone is talking about your latest "crooked" deals.

Yeah, #crooked Hillary.

Wall Street banks and funds and corporate America will turn against him because they will realize that he is unable to deliver on his promises.

When that happens, I expect the Republicans to put pressure on him to resign. They might even threaten him with impeachment.

With Mike Pence in place they really have no need for Donald Trump.

Bold predictions, I know, but to me this makes more sense than John McCain pulling a "maverick" stunt and vote for Trump's impeachment. It never happened before and I am not holding my breath.

Besides, much of Trump's tainted deals are already in the public realm and I suspect more of them will surface in the coming months.

This is the price you pay when you start a feud with intelligence agencies.

The Presidential Grift

It has only been five months but Trump has benefited enormously from being president.

Here is a list of projects that are considered, you know, conflicts of interest.

That Tower in Toronto
That Caribbean Villa
Those Condos for Sale
Those Reelection-Campaign Funds
That Second Hotel in Washington, D.C.
That Property in Azerbaijan
That Trump Tower Penthouse
That Resort in the Dominican Republic
That Chinese Trademark
That Meeting at Mar-a-Lago
That Defense Department Trump Tower Rental
That Red Cross Ball
That D.C. Labor Dispute
That Estate in Palm Beach
Those Expansion Plans
That Hotel in Vancouver
That Reality-Television Show
That Pipeline
Those HUD Grants
That Golf Course in Aberdeen
That Other Billionaire New York Real-Estate Developer
Those Indonesian Politicians
That Emirati Businessman
That Virginia Vineyard
That Las Vegas Labor Dispute
That Kuwaiti Event
Those Certificates of Divestiture
That Carrier Deal
That Blind-Trust Issue
Those Fannie and Freddie Investments
That Phone Call With Taiwan
That Deutsche Bank Debt
That Secret Service Detail
That Property in Georgia (the Country)
That Phone Call With Erdogan
That Hotel in Washington, D.C.
That Argentinian Office Building
Those Companies in Saudi Arabia
That British Wind Farm
Those Indian Business Partners
That Envoy From the Philippines

Russian financing is featured prominently on the list.

For instance, the first item on the list the Tower in Toronto is financed by a Russian Canadian, Alexander Shnaider who received millions of dollars from Vnesheconombank, a state owned Russian bank whose transactions are signed off by the Kremlin.

And this is not their first Toronto real estate deal. Between 2004 and 2012, Trump, Shnaider and his partner Val Levitan, another Russian Canadian, collaborated on a hotel-condo project in Toronto.

And curiously, like most of the deals on that list, it was not financially successful.

Trump has always claimed that he had no investments in Russia, implying that we cannot impute his admiration for Putin and his reluctance to criticize Russia to a financial motives.

Well, this is both true and false. He has no investments in Russia but Russia has an investment in him.

Golf writer James Dodson met up with Eric Trump in 2014. Eric, as big a braggart as his father, showed him their new golf course and said that they had access to $100 million for such developments.
“So when I got in the cart with Eric,” Dodson says, “as we were setting off, I said, ‘Eric, who’s funding? I know no banks—because of the recession, the Great Recession—have touched a golf course. You know, no one’s funding any kind of golf construction. It’s dead in the water the last four or five years.’ And this is what he said. He said, ‘Well, we don’t rely on American banks. We have all the funding we need out of Russia.’ I said, ‘Really?’ And he said, ‘Oh, yeah. We’ve got some guys that really, really love golf, and they’re really invested in our programs. We just go there all the time.’ Now that was three years ago, so it was pretty interesting.”
Eric denied it, of course, but, as you can imagine, this explains a lot. Besides, it is not just Dodson making such allegations.
“The Trump-Russia links beneath the surface are even more extensive,” Max Boot wrote in the Los Angeles Times. “Trump has sought and received funding from Russian investors for his business ventures, especially after most American banks stopped lending to him following his multiple bankruptcies.”
And we should not forget the Bayrock Group that financed Trump Soho.

Bayrock is owned by Tevfik Arif, "a former Soviet-era commerce official originally from Kazakhstan."
“Tax evasion and money-laundering are the core of Bayrock’s business model,” the lawsuit said of the financiers behind Trump Soho. The financing came from Russian-affiliated business interests that engaged in criminal activities, it said.
And it is not a one-off deal.
But Bayrock wasn’t just involved with Trump Soho. It financed multiple Trump projects around the world, Foer wrote. “(Trump) didn’t just partner with Bayrock; the company embedded with him. Bayrock put together deals for mammoth Trump-named, Trump-managed projects—two in Fort Lauderdale, Florida, a resort in Phoenix, the Trump SoHo in New York.”
There is also his extensive commercial ties to Sapir Group, owned by Tamir Sapir, originally from the former Soviet Republic of Georgia.
The Times also reported that federal court records recently released showed yet another link to Russian financial interests in Trump businesses. A Bayrock official “brokered a $50 million investment in Trump SoHo and three other Bayrock projects by an Icelandic firm preferred by wealthy Russians ‘in favor with’ President Vladimir V. Putin,’” the Times reported. “The Icelandic company, FL Group, was identified in a Bayrock investor presentation as a ‘strategic partner,’ along with Alexander Mashkevich, a billionaire once charged in a corruption case involving fees paid by a Belgian company seeking business in Kazakhstan; that case was settled with no admission of guilt.”
In fact, these peculiar financial arrangements are the reason why he fired Preet Bharara two months after promising to keep him as US Attorney for the Southern District of New York:
Another F.B.I. insider points out that while the media has focused on the investigation of possible collusion between Russia and Trump’s campaign, there are actually multiple inquiries in progress. “There’s also a cyber investigation, about the hacking and whether crimes were committed,” he says. “And then there’s the business side: Was there money laundering going on? Money from these Russian plutocrats that’s been washed through Trump’s real estate and businesses? That’s gotten overlooked, but Preet Bharara and the Southern District were supposedly looking into that.” 
Laundering Russian oligarchs' money is a big deal as it has criminal ramifications. Such investments would show up in those returns. And who has them? Well the IRS.

I am keeping my fingers crossed for some judicious leaks in the coming months.

I also expect more of his shady deals to come under closer scrutiny, like the Trump Tower in Baku that was financed by companies linked to Iranian Revolutionary Guard.

Citizens for Responsibility and ethics in Washington (CREW) sued Trump using the emolument clause. ACLU is also looking for a plaintiff with standing to launch its own lawsuit.

Regardless of their outcome, these efforts will force the Trump Organization to reveal many dubious arrangements and will seriously affect The Donald's ability to profit from the presidency.

Foreign entities who might be interested in paying a premium while buying Le Chateau des Palmiers at St Maarten in the hope of getting the president's ear might no longer be willing to do that if it carried the risk of attracting unwanted attention to their businesses.

Already the Kushners are finding out that Jared's new position, rather than being a boon, was making life harder for their company: They were in China seeking $150 million in investment and Nicole Kushner Meyer's mention of her brother set off a media storm which forced them to apologize and cancel their upcoming events in China.

Perhaps more importantly, these disclosures are likely to tarnish the Trump brand.

Right now, it stands for something brash, cocky and nouveau riche and it appeals to similarly predisposed people.

If it becomes synonymous with money laundering and shady dealings with criminal or tainted characters it will not be worth much.

Wall Street and Corporate America

Fox News is still feeding Hillary's mail servers line to its viewers (which is why they still love the Orange Man) and hardly mentions White House scandals.

But if Wall Street banks and funds turn against Trump, as they seem to be doing, News Corporation will no longer be able to maintain radio silence on Trump presidency disasters.
Through the various tremors of his first 100-odd days, Trump has frequently ignored various self-created headaches by pointing to the roaring stock market. It’s all he has to show for his time in office so far. But if he loses the support of Wall Street and the financial markets, one thing is sure: he can pretty much kiss his presidency good-bye.
Until recently Wall Street seemed unmoved by Trump's erratic behavior or the crises engulfing his Administration.

But this is changing. Financial Times noted that the markets placed 26 percent chance on Trump being impeached in 2017. And the odds of him staying until the end of 2018 are now 55 percent.

So 45 percent of contract buyers are predicting that he will be history in two-years time.

This is unprecedented.

Wall Street is fidgety. According to the New York Times,
“For the first time, there is real concern that Trump has overstepped his boundaries, which may create some chaos in the market,” said Curtis Schenker, co-founder of Scoggin Capital Management.
When it was reported that Trump asked Comey to shut down the Russia investigation:
The Standard & Poor’s 500-stock index sank 1.8 percent, the most since September, and the VIX, Wall Street’s “fear gauge,” a measure of volatility, jumped 46 percent as investors became pessimistic about Mr. Trump’s agenda. 
VIX has long been very low and this spike is very unusual.

More worryingly for the Trump Administration,
Yet investors, who have shrugged off previous turmoil in the Trump administration, were clearly rattled by the most recent episode. Some on Wall Street speculated about whether the White House’s pro-business pledges to cut taxes, lighten regulation and increase infrastructure would be thwarted by the growing tumult in Washington. Some bank analysts even discussed the probability of impeachment.
What bothers Wall Street and corporate America is the fact that Trump White House will be unable to enact its legislative agenda. They expect a tax code reform, lighter regulations on financial transactions, a new health care bill that will be cheaper.

And it looks more and more that Trump will not be able to deliver.

The Orange Man is toast.

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