Washington, DC -- (ReleaseWire) -- 06/27/2016 --DAWN BENNETT: Andrew Feinberg is the author or co-author of five non-fiction books. He's written for the The New York Times, GQ, and Barron's. He has also contributed over 100 humor pieces to the New York Times, Playboy and the Wall Street Journal, among other publications. This month, Andy wrote a piece for The Wall Street Journal, published on June 9, 2016, which illustrated in detail how Donald Trump operates when contractors don't do a good job for him. Andy, welcome to Financial Myth Busting.
ANDREW FEINBERG: Great to be with you.
BENNETT: So many claims have been made about Donald Trump's business career, especially during the presidential campaign, and the truth seems to be, to me, somewhere between a mix of bragging and business success and business failure. From your writings and your investigations, is Trump a titan of American business, or a reality star who has built a career building businesses with inherited money?
FEINBERG: I think it's closer to the second one. He is a genius at building his brand. And what he is doing these days is mostly licensing the brand—people are putting his name on buildings and he gets a percentage. But in New York, where I live and where Trump lives, he has a terrible reputation for stiffing people, for being a bully, suing people who can't afford to pay for the legal action, and that happened in Atlantic City, it has happened in New York. In 2014, way before the presidency, there was a poll in New York and he had a 61% unfavorable rating among New Yorkers. And it's because of some of the things I mentioned. He can still borrow from some people; he doesn't screw all his partners, otherwise he wouldn't have any partners. But there so many stories. I am not allowed to tell the details of this. My next-door neighbor, he lives on my floor, was stiffed by Donald Trump.
BENNETT: I know you've interviewed Trump, and I know, knowing your personality, I'm sure you asked him about this. Do these reports jibe with what he told you?
FEINBERG: We had a short interview, and it's actually an interesting story. In 1987, after the crash, Trump and T. Boone Pickens had said they were out of the market. So I interviewed Trump and we spoke 20 minutes before my deadline on Friday. I was writing a piece for the New York Times. And he said he was out of the market, but he got in on Tuesday morning after the Monday crash and sold on Wednesday and made 20%. And now I feel like a fool because I put that in the New York Times.
BENNETT: You didn't ask him what did he put it into?
FEINBERG: Whatever he said, there would have been no way to verify it. And he returned my call so quickly. I just figured I'd never even get to him. But it's like he heard it was the New York Times. And it was brilliant, and he does things like that. If he became President, which scares the daylights out of me, but it is conceivable he could do a 'Nixon goes to China' kind of thing with climate change or with gun control, and already he's said he will talk to the NRA, although then in a speech in Texas he was saying I'm not going to limit the size of your magazines. He does have some deal making skills, and given the positions he's had, obviously he feels comfortable disagreeing with a lot of the professional politicians, which is a great part of his appeal.
BENNETT: It's also I part of his personality. The Wall Street Journal in May did a story where Trump actually told them that as a matter of general practice, he underpays contractors if they don't do a good job. But it's a quote-unquote 1000-to-1 times he pays what is owed. That, again is backing into what you were saying.
FEINBERG: I have also heard and read that some contractors will add a 10% or 20% premium for doing the job.
BENNETT: A "Trump premium."
FEINBERG: Yes. He is a slow payer, and there's also a good chance that you won't get 100 cents on the dollar. As to how often it's actually justified, I know in reading about some of the firms in Atlantic City that went under partly because he didn't pay them, he even told several of them, 'Oh, I'd like you to do more work for me.' So that was part of the carrot, saying I'm not going to pay you all that I owe you, but I want you to do more work. So obviously he wasn't too dissatisfied with the work if he was going to hire them again. I don't think he can help himself. I think he needs to feel like a winner on every small point. Like in Atlantic City, all his casinos went bankrupt, but he made money. His partners, the equity holders, the bondholders, the vendors, got screwed, but he can say, 'I won.'
BENNETT: Yes, because he made money. But you know there are companies, like for example I understand Microsoft, they hold off paying anybody for 90 days to make sure that whatever work was done with them was correct and it works and was effective. Again, I don't know if he's the only one that does that, but it is seemingly becoming more and more popular to do that, to not pay immediately, to actually wait to make sure that the job that they hired them for actually was done correctly.
FEINBERG: It can make sense in some cases, absolutely. I just find it interesting that so many people who worked with him have gone public saying, "Never again." Going back to his first big project with Hyatt, the Pritzkers hate him, and have hated him ever since. That deal, he went way over budget, he lied about things, and etc. etc. I wrote my new novel Four Score and Seven, Abraham Lincoln is watching Trump from the Beyond and spins so much in his grave he comes back to life for two weeks to confront him and say what are you going to do America?
BENNETT: Andy, let's talk about your new book, Four Score and Seven, a humorous reimagining of Abraham Lincoln being reborn to witness the 2016 election. And your stand-in for Donald Trump is a guy who runs a pay-to-go-bathroom service, and the other candidate is a Senator. Why Lincoln, and what do you think he would actually say about modern America today and modern American politics?
FEINBERG: I just absolutely fell in love with him a year ago. I read 25 books, it was late in life. It was not that I didn't like him before that, but—
BENNETT: That's a love affair.
FEINBERG: He truly never told a lie. So I wanted to bring his perspective into today. The first thing, he would be saddened that we have this social civil war under the surface where people on the Left get their news from one group of sources, people on the Right from another. And there are so many people even with their friends they can't talk about politics anymore. They bring different facts to the table. So he would want to use technology, he would love the internet and think it to be his great tool for making everyone smarter and better informed. In the book he pays people on the Left to read articles by people on the Right, and vice versa, and have people pick the best article that articulates a view that is different from theirs. And the partisanship, which certainly existed in his day but not like this, and in fact in his day he fought a lot with the Radical Republicans and the Abolitionists, and he was not an Abolitionist, so he was fighting within his own party. So he understands partisanship. And he also believes that the most important thing in politics was putting yourself in the other person's shoes, to understand. And he thought he could reach a compromise with almost anybody. We know him of course for the Civil War and he was uncompromising, but in everything else he thought every law had some evil in it and the job of the President and Congress was finding laws that had more good than evil.
BENNETT: We don't have politicians or President that do that. I think they create fear more than trying to help people feel stronger. I think that whatever we've got going on today is making Americans feel isolated and helpless victims of the too powerful.
FEINBERG: Right. And to follow on to what you just said, this loss of the sense that we're all part of one country, so that if a President asked for certain sacrifices, people would be more reluctant, I suspect, than they might have been at another time. There's just so much animosity between different parties. One of the interesting things about Trump is that some of his ideas—and he won the primaries—are not supported by the Republican establishment. So that's good news in a sense that perhaps there can be some change in the rigidity of both sides.
BENNETT: Let's talk about Trump as a possible President. He's talked about using the same tactics he's used to refinance mortgages to pay down American debt, perhaps giving our creditors a significant haircut. In my mind, this might actually be necessary, but I'm not sure if talking like this so early is actually a smart strategy. What do you think Andy?
FEINBERG: Barron's, which is owned by Rupert Murdoch, favors Hillary on the economy, and I just saw a survey, most CEOs favor her on the economy. I think, first, if Trump got elected, there's a good chance you would see a decline of 30% in the market just out of fear both on Foreign Affairs and on the trade war—which might never happen of course. On the debt, again, if you default on part of the debt, that would crash the market. Whether or not it is a good thing for the long run, and I don't think it is, then you would have a 50% decline, and the dollar would probably no longer be a reserve currency. I mean, we've never done this, we've never defaulted. So I agree with you that it's too early to talk about because it has not affected the bond market, but potentially it could. The good thing there is he might bring ideas that no one else has brought public before, and who knows, I think that's a dangerous one now. Fortune magazine run an article saying that if his plans went through, the national debt would go up by 10 to 12 trillion dollars over the decade, because he is starting with tax cuts for everybody. And saying that would eliminate waste, fraud and abuse, which is an old line which there never seems to be as much of it as we suspect there is, you would have budgets even more crazy or out of wack than they are today.
BENNETT: You were a money manager before, and these markets aren't normal by any stretch of the imagination.
FEINBERG: No, absolutely not.
BENNETT: Whether Hillary Clinton gets in or Donald Trump gets in, it could be that the truth comes out and the markets do what they are going to do, which is correct, as it probably should. But talk to me what you see, as an ex-money manager and now as a financial writer and as a writer in general, what are you seeing in the marketplace starting in 2017?
FEINBERG: I'm nervous. I think we can muddle along, but the question is what happens when rates go up. Because we do have such a huge national debt, and that debt service is artificially low right now, and that's not going to be the truth all along. I think all these people are talking about rising rates, we need rising rates, we do for savers, and we do on the one hand for normalizing things, but I think people may freak out when our debt service doubles in several years.
BENNETT: Andy, thanks so much for being on Financial Myth Busting. Get his book, it's excellent.
For over a quarter century, Dawn Bennett has been successfully guiding clients through the complexities of wealth management. Her unique vision and insight into market trends makes Bennett a much sought after expert resource with regular appearances on Fox News Channel, CNBC, Bloomberg TV, and MSNBC as well as being featured in Business Week, Fortune, The NY Times, The NY Sun, Washington Business Journal in addition to her highly regarded weekly talk radio program - Financial Mythbusting. Through prudent and thoughtful advice, Dawn Bennett has strived to consistently provide the highest quality of guidance.
About Dawn Bennett
Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com.
She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.
She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett.