It’s Just the Start of the Sell-Off, Not the End

BALTIMORE, Maryland – Is Donald Trump broke yet?

We don’t know. But at the end of the first quarter, investors held about $24 trillion in stocks. Stock prices are down about 10% since then… leaving the rich $2.4 trillion less rich.

Government bonds have generally gone up. Junk-grade corporate bonds have gone down.

And real estate?

It takes longer to react. Real estate is not “marked to market” immediately. Buyers and sellers discover prices slowly.

Phony Wealth

The “wealth” created in Stage III of the U.S. credit boom was largely phony. It came as the Fed dropped the price of money to zero.Markets discover what a stock is worth based on the expected earnings of the company. Goosing up stock prices doesn’t change that. So, the whole thing is a scam.

But the cronies love it. With the federales propping up the market, the rich – the owners of most of the world’s financial assets – could take chances and grow richer.

They figured they couldn’t lose…

Mr. Trump’s Fabulous Fortune

That’s how “The Donald” got so rich – making big bets on rising property prices.

Trump has gone bankrupt four times. You’d never want to trust him with your personal finances. But he may be just the man to head the U.S. government. He’s got the experience we need in Washington!

Trouble is, just when Americans are looking for someone with the Midas touch, Mr. Trump’s fabulous fortune may turn from gold to dross.

His public disclosures are thin. But his business practices – big bets, high leverage – are well known. At the bottom of the last crisis, he was said (by us) to be the “poorest man in the world,” with a net worth of MINUS $100 million.

Who knows what will happen when we get a real crash. Mr. Trump might have to declare bankruptcy a fifth time!

When this sell-off intensifies, Mr. Trump, Wall Street, and the One Percent will lose money.

The feds’ fictitious capital will go back where it came from – nowhere.

The rich won’t be so rich… the poor (relatively speaking) won’t be so poor… and all the do-gooders kvetching about the unfairness of it all can go back to updating their Facebook status.

Reprinted with permission from Bonner & Partners.