US Politics Mega-thread - Page 171

On May 07 2018 01:52 IgnE wrote:
so rather than buy 1 building in cash he could have bought 10 buildings with debt? and then shared his return on those 10 buildings with the debt financiers, but overall eventually owned 10 buildings?

On May 07 2018 03:01 TheDwf wrote:
Dunno if it's part of your national news, but Trump using the Bataclan 13/11 attacks as an example of "why people should have weapons" pretty much pissed the whole France, and various parties are pressuring our president to demand official excuses from Trump.

On May 07 2018 03:03 KwarK wrote:

Yes. It’s built on the assumption that the underlying investment appreciates in addition to providing a revenue stream. In a real estate boom you’ll look like a genius. In a bust you lose other people’s money.

On May 07 2018 01:29 IgnE wrote:


how does debt increase the return?

On May 07 2018 03:14 IgnE wrote:


but outside of real estate speculation on booms or busts it would seem that, in the long-run, the "return" would be the same whether debt-financed or bought in cash, except that in the debt situation you would be less the interest payments. or is the contention that real estate in the long run is always a good investment and so you should just be buying as much as you possibly can with leveraged capital?

On May 07 2018 03:39 mozoku wrote:

Let's assume the yearly appreciation on a house is 3% and the yearly appreciation in the market is 5%.

Suppose I have $10 and want to maximize my return. I can invest in the market or put a 10% downpayment on a $100 house. At the end of the first year:
a) if I invest in the market, I receive $0.50 as a result of appreciation (i.e. the 5% aporeciation on $10).
b) If I invest in the house, I receive $3 as a result of appreciation (i.e. a 3% appreciation on $100).

My return on my $10 in (a) is 5% ($0.50 / $10).
My return on my $10 in (b) is 30% ($3 / $10).

The cost of interest on debt reduces the return in a more realistic scenario, but keep in mind that the value of houses (like other assets) generally increase exponentially (i.e. 3% appreciation of last year's value each year), while the interest rate accrual is generally applying to a shrinking principal (because you're making payments on the debt). It generally works out to higher leverage leading to higher returns, though becoming overleveraged can obviously lead to its own set of problems.

As far as personal finance goes, there's also risks to having to much exposure to one sector (i.e. real estate). Hence why NIMBY-ism is so strong in places like SF (because the value of their financial portfolio is disproportionately connected to the value of their house).

I didn't fully read ChristianS' explanation but he seemed on the right track. Sorry if I'm repeating what he said.


Hopefully the above answers this question. It's reasonable to expect that the average long-run return on real estate is > 0 (habitable land on Earth isn't growing, there's political/zoning obstructions to building in general, the human population will likely continue to grow, etc.), so leverage in real estate would be expected to increase returns in the long-run.

The principle of leverage increasing returns (and risks) isn't unique to real estate. It applies to any financial asset that is expected to appreciate, but for various reasons (relative stability of returns being a big one) it's easier to obtain low cost capital for real estate purchases than it is for e.g. short-selling.

On May 07 2018 04:53 IgnE wrote:


so basically the claim is that it is unusual to turn down an opportunity to leverage your capital, and real estate offers an uncommon opportunity to do so. real estate prices are expected to appreciate forever, and so the bank will offer loans that leverage your capital because they have a lien on the property until they recoup their capital with interest. banks in this way act like temporary cash-buyers of real estate with cash that they create, and the leveraged creditor is eventually rewarded with the property for being a good custodian of the property?

On May 07 2018 01:29 IgnE wrote:


how does debt increase the return?

On May 07 2018 03:05 zlefin wrote:

haven't heard about that; but not surprising, put it on the very long list of trump faux pas in diplomacy. Trump won't apologize certainly, it's not in his nature, and what he said plays well to his base; and playing to your base counts for far more than playing to someone else's base for any politician.

A notice posted on the NRA event page explained that "Due to the attendance of the Vice President of the United States, the U.S. Secret Service will be responsible for event security at the NRA-ILA Leadership Forum. As a result, firearms and firearm accessories, knives or weapons of any kind will be prohibited in the forum prior to and during his attendance."

On May 07 2018 02:42 ChristianS wrote:

That's my understanding of it, at least. You buy a bunch of properties using mostly loaned money, then you have to pay the interest on the loans but you also get all the appreciation of the properties, and you're getting equity on a bunch of properties instead of just one. I can imagine a few reasons somebody would choose not to leverage their investments, I'm sure someone with more financial understanding than me could list more:

-You're a skittish investor who likes low-risk, low-reward investments.

-You can't get anybody to loan to you for some reason.

-You don't want to give lenders the information about your finances that they would need to approve a loan.

I thought it was already well-known that all the major banks had blackballed Trump? That seems like the easiest explanation then.

Before he joined the Trump Organization and became Mr. Trump’s lawyer and do-it-all fixer, Michael D. Cohen was a hard-edge personal-injury attorney and businessman. Now a significant portion of his quarter-century business record is under the microscope of federal prosecutors — posing a potential threat not just to Mr. Cohen but also to the president.

...

He has spent much of his personal and professional life with immigrants from Russia and Ukraine. His father-in-law, who helped establish him in the taxi business, was born in Ukraine, as was one of Mr. Cohen’s partners in that industry. Another partner was Russian. And Mr. Cohen used his connections in the region when scouting business opportunities for Mr. Trump in former Soviet republics.

More recently, Mr. Cohen and his father-in-law lent more than $25 million to a Ukrainian businessman who has a checkered financial record and a history of defaulting on loans. And Mr. Cohen long held a small stake in his uncle’s catering hall, which was frequented by Russian and Italian mobsters.

In addition to his legal and taxi businesses, Mr. Cohen has had a seemingly charmed touch as a real estate investor. On one day in 2014, he sold four buildings in Manhattan for $32 million, entirely in cash. That was nearly three times what he paid for them no more than three years earlier.

...

The $130,000 payment to the actress is in a way emblematic of Mr. Cohen’s many business dealings. Its provenance is murky, obfuscated by a private agreement, pseudonyms and evolving explanations. President Trump said this past week that he had paid Mr. Cohen a retainer that was used to reimburse the $130,000, directly contradicting his earlier statements that he knew of no payment to Ms. Daniels.

Within the Trump Organization, it was Mr. Cohen’s job to deal with Mr. Trump’s thorniest problems. But now, whatever problems investigators find in Mr. Cohen’s own array of businesses could double back on Mr. Trump.

...

One of those relatives was his uncle Dr. Morton W. Levine. Uncle Morty, as he was known to his family, had no children of his own, and he and Mr. Cohen were close. He even let his nephew drive his Bentley.

Dr. Levine, a family practitioner, provided medical assistance to members of the Lucchese crime family, “which aided their illegal activities,” according to a sworn affidavit in 1993 from an F.B.I. special agent. The agent was involved in the investigation of the Lucchese underboss, Anthony (Gaspipe) Casso, who “regarded Levine as someone who would do anything for him,” according to the affidavit. That account was buttressed by testimony from a longtime Lucchese associate in an unrelated 2006 federal trial. In 1992, Dr. Levine bought Mr. Casso’s home while Mr. Casso was a fugitive. Dr. Levine has acknowledged in court documents that Mr. Casso was a patient. But he said he did not know that the house belonged to Mr. Casso and denied any wrongdoing.

...

Mr. Cohen began his professional legal career at a personal injury firm in 1992, the year after he graduated from Cooley Law School in Michigan. His boss at that first job would later plead guilty to bribery.

Mr. Cohen’s marriage in 1994 gave him entree to communities of immigrants from the former Soviet Union.

His new father-in-law, Fima Shusterman, had emigrated from Ukraine in 1975. By the time of the wedding, Mr. Shusterman had landed in serious legal trouble. In 1993, he pleaded guilty to evading federal reporting requirements for large cash transactions, admitting that he had cashed $5.5 million worth of checks to evade disclosure laws. Mr. Shusterman cooperated with prosecutors in a related case and was sentenced to probation.

In the years after his marriage, Mr. Cohen began doing business with Ukrainian and Russian immigrants. They hailed from New York, Chicago and Florida, in neighborhoods like the Brighton Beach section of Brooklyn and parts of Miami like Sunny Isles, known as the Russian Riviera, communities through which a vein of organized crime ran.

In 1999, Mr. Cohen would find himself in the middle of a Sunny Isles real estate deal involving a hockey player and a purported figure from the Russian underworld.

Nearly 20 years later, the details of the transaction remain unclear, but Mr. Cohen received a check for $350,000 from a Russian player for the Montreal Canadiens that was part of a deal involving an apartment in Sunny Isles.

The player’s agent later testified that the money was intended to go to Vitaly Buslaev. Mr. Buslaev, who has been identified by multiple Russian media outlets as a Mafia figure, was a friend of one of Mr. Cohen’s business partners, according to two people who knew both men.

...

He partnered with Symon Garber, another Ukrainian-born businessman, who was borrowing large amounts of money to finance taxi businesses in both Russia and the United States. A lawyer for the two men said in a court filing that he had helped them lay the groundwork for a planned taxi business in Moscow in the mid-1990s, although it never materialized.

...

During Mr. Trump’s 2016 campaign, Mr. Cohen pursued plans for a Trump Tower in Moscow with Felix Sater, a Russian immigrant and friend of Mr. Cohen, who had worked on other real estate development deals with Mr. Trump and had explored possible ventures in Russia. Mr. Trump and Mr. Cohen worked with Mr. Sater even after his role in a stock manipulation scheme involving Mafia figures and Russian criminals was revealed. (Mr. Sater pleaded guilty and became an informant for the F.B.I. and intelligence agencies.)

While juggling his Trump duties, Mr. Cohen turned over management of his cabs to Mr. Garber in 2006 and received as much as $1 million per year, legal records show. After a falling-out with Mr. Garber, Mr. Cohen became partners with Evgeny Freidman, known as Gene, an immigrant from St. Petersburg, Russia, who had assembled a large taxi fleet.

Both of Mr. Cohen’s taxi partners had a history of legal run-ins. Each has been made to pay more than $1 million for overcharging their drivers, according to the New York State attorney general. Former business partners also accused each of them of forging signatures, stiffing lawyers and dodging debt collection efforts.

The Chicago authorities found that Mr. Garber and his taxi businesses used 180 unauthorized cars as taxis in that city; he agreed to pay a fine of nearly $1 million.

In 2016, a federal judge found that Mr. Freidman had transferred more than $60 million into offshore trusts to avoid paying debts. Last April, New York City regulators barred him from continuing to manage medallions. He currently is awaiting trial in Albany on charges he failed to pay $5 million in taxes.

Despite the prohibition issued by city regulators, Mr. Freidman is still managing Mr. Cohen’s medallions, both men have said.

...

The financial maneuvering has continued even after the federal search warrants were executed. On April 24, Mr. Cohen refinanced all 16 of his taxi company medallion loans. The transactions, with Sterling National Bank, appeared to extend the due dates on the loans by four years, according to public filings on the refinanced loans. And they added a new, unusual source of collateral: If Mr. Cohen were to default, Sterling would have the right to any money that Mr. Freidman owes Mr. Cohen.

Many of Mr. Freidman’s taxi companies have declared bankruptcy. Asked about the loans, Mr. Freidman’s lawyer said his client had “no assets” that could be used as collateral.

...

Starting in 2000, Mr. Cohen set up a series of companies in New York City. There were two medical practices, an acupuncture office, two medical billing companies, two management companies and a transportation company.

The ventures were noteworthy, in part, because they were created at a time when countless phony companies were cropping up to exploit so-called no-fault auto insurance laws in New York and other states. Hundreds of doctors, businesses owners and others would eventually be criminally charged or accused of fraud by insurance companies.

...

The no-fault insurance schemes, which were often masterminded by organized crime figures from the former Soviet Union, all followed a basic template. Staged or exaggerated car accidents were used to generate a tidal wave of “patients.” Transportation companies then took the patients — often low-level criminals — to what in many instances were sham medical clinics, diagnostic testing offices, and acupuncture and physical therapy offices. Billing companies were created to collect money from insurers, and management companies then siphoned the funds out to the scheme’s operators. Some operators were so bold that they sued insurers that had stopped paying after they realized they were being defrauded.

Mr. Cohen’s role, if any, in the operation of the companies he helped set up was unclear. The only people listed in the incorporation papers as having roles in the businesses are the two doctors, Aleksandr Martirosov and Zhanna Kanevsky, who were each affiliated with a medical practice.

But both of those doctors were accused of insurance fraud in connection with different medical practices they operated.

Dr. Martirosov was arrested and charged with insurance fraud and grand larceny in 2003. A little more than a year earlier, Mr. Cohen had registered Avex Medical Care in Dr. Martirosov’s name.

...

Avex Medical Care continued to operate after Dr. Martirosov’s arrest. The company later sued insurers at a frenetic pace that averaged almost one lawsuit a week from 2003 to 2008. The suits targeted insurers that had balked at paying for treatments for accident victims.

In the late 1990s and early 2000s, Mr. Cohen’s personal injury practice filed hundreds of lawsuits largely stemming from auto accidents. For part of that time, a bustling bullpen of clerks and paralegals worked the phones at his Long Island City office. They sought settlements with insurers and churned out suits on behalf of clients, many of whom were referred to clinics that were later caught up in no-fault insurance fraud investigations.

...

From 2011 to 2015, limited liability companies connected to Mr. Cohen purchased at least five buildings in Manhattan, public records show.

Like many of Mr. Cohen’s business dealings, the transactions were unconventional. His companies would buy a building, often in cash. Soon after, they would flip the building in another all-cash deal for four or five times the previous purchase price. The buyer was generally another limited liability company.

...

Richard K. Gordon, director of the Financial Integrity Institute at Case Western Reserve University’s law school, said that such real estate transactions — large profits, achieved quickly, involving cash purchases by L.L.C.s — should raise red flags.

“If I were the bank, I’d either refuse his business up front or rate him extra high risk,” said Mr. Gordon, who once led anti-money-laundering efforts for the International Monetary Fund.

On May 07 2018 14:58 Wulfey_LA wrote:
It is amazing how fast Republicans jumped over (1) as a man of wealth our guy need a fixer to hush his hussies all the way to (2) Cohen did nothing wrong cause it wasn't intended as a campaign contribution!!! Bad men need Fixers. Did Mitt Romney need a fixer to clean up messes and hush embarrassing situations? I guess literally no one cares that the President is such a sleeze bag that he needs extra-legal assistance in cleaning up his messes.

On May 07 2018 15:20 GreenHorizons wrote:


It shouldn't come as a surprise to anyone. Certainly not to people who voted. That's why they are just eating it, the criminal case is basically dead and it's strictly a political one at this point. One that Trump is unquestionably winning. Democrats squeezed all they could get out of this whole Russia, Stormy Daniels, etc... thing and it failed miserably. It's all over but the crying at this point.

It's late, but Democrats have enough time to pivot, but I doubt they will, or if they do it won't be effectively.

The 2020 primary (or at least the fake one Democrats intend to run) is going to be something else.

On May 07 2018 15:20 GreenHorizons wrote:


It shouldn't come as a surprise to anyone. Certainly not to people who voted. That's why they are just eating it, the criminal case is basically dead and it's strictly a political one at this point. One that Trump is unquestionably winning. Democrats squeezed all they could get out of this whole Russia, Stormy Daniels, etc... thing and it failed miserably. It's all over but the crying at this point.

It's late, but Democrats have enough time to pivot, but I doubt they will, or if they do it won't be effectively.

The 2020 primary (or at least the fake one Democrats intend to run) is going to be something else.

On May 07 2018 16:09 Excludos wrote:


What exactly are you measurements for saying "it failed miserably"?

On May 07 2018 16:19 Doodsmack wrote:


Citation needed for "the criminal case is basically dead." I'm assuming you're referring to any potential campaign finance violations.

On May 07 2018 16:35 GreenHorizons wrote:


Trumps approval hit a low after backing Roy Moore, the whole Cohen thing has seen his approval rating rise over the last month. They've released all the biggest most juicy bits and worn them out. Trump's favorable's are even (higher in 2of3 recent polls) than when he got elected. Hillary's are worse btw.

https://www.realclearpolitics.com/epolls/other/president_trump_job_approval-6179.html#polls
https://realclearpolitics.com/epolls/other/trump_favorableunfavorable-5493.html

On May 07 2018 19:10 Excludos wrote:


That is an interesting metric, but only half of the whole. It's not only about getting people to support Trump less, it's also about engaging democratic voters to actually get off their asses and vote. The more tired and frustrated people are with the GOP, the more likely they are to vote against them, as proven by the few elections that has happened since Trump which has been overwhelmingly blue, even in previously considered safe Red areas. Polls also indicate there is a very good chance Democrats are going to get a majority i congress this fall, but only if people get out there and vote. All news meant to discredit Trump works in this favour.