Trump: The Art of Going from Bankruptcy to a Comeback

Hi everyone, welcome to Cold-Knowledge Blind Box. In the last episode we talked about how Trump, with the help of the lawyer Roy Cohn, won a major lawsuit against his family's company, the Trump Organization, over racial discrimination. Roy was Trump's lawyer, and you could also say he was Trump's first business mentor. He taught Trump a life creed that Trump followed almost his whole life:

1. First rule: attack, attack, and keep attacking.

Cohn was the first to sue, going after the plaintiffs, that is, the city government, accusing it of persecuting capitalists, and demanded 100 million dollars in damages in return. It was impossible, of course, but throwing the other side off balance is what matters.

Never admit you're wrong. Wait for the right moment, turn the tables, and let the other side fall into chaos.

1. Second rule: admit nothing, deny everything.

Roy seized on the fact that there was no solid evidence, and in court he argued and stonewalled, refusing to admit anything.

1. Find the key to the problem.

As the Godfather puts it, the person who spends half a second seeing through the essence of things and the person who never sees through them in a lifetime are destined for entirely different fates.

Roy found the person behind the lawsuit, who was sitting in the courtroom: Walter. It was the Justice Department's idea for the New York government to sue the Trump Organization. Roy knew the case couldn't be won in court, so being able to use the other side's affair evidence to threaten them into dropping the suit was already the best possible outcome.

These three rules are Trump's life creed. Attack, and turn it back on the other side. Full of information, facing the enemy with an arrogant air.

After winning the first battle, Trump had firmly established himself within the family business. Unlike his father, who built his fortune on housing for working-class people who couldn't afford homes, Trump aspired to the glamour of the metropolis. He wanted to buy the Commodore Hotel, a declining hotel near Grand Central Station, and do a major renovation. In theory this should have been a great bargain: a prime spot in midtown Manhattan, and a once famous hotel.

But the backdrop of the era was the 1970s. There was a fiscal crisis, New York was on the brink of bankruptcy, crime rates were soaring, and everyone was waiting to be rescued. It felt a lot like Gotham City. Other states had given up on rescuing it, and the mayor was looking for a way out on his own. To revive the economy and stop unemployment, he partnered with real estate developers.

His family still didn't support him. Why? Just think about it: in a period of economic decline, who would dare to make a big investment in a high-end hotel? It was very hard. Trump wanted to prove he could outdo his father. The two sides hit it off. It made national headlines, and he secured a 40-year tax exemption, saving over 100 million dollars.

Trump didn't name the hotel after himself at first. He called it the Grand Hyatt. The overall design was lavish and luxurious. Once it was finished, the hotel became a major news story in New York. Reporters and interviews kept coming, and it was undoubtedly a new landmark of the city.

It was also around this time that Trump came to realize: I want to be famous. Unlike his low-key father, Trump was extremely high-profile. He won love with a Czech model, the female version of Trump. He oversaw the interior renovation of the hotel and launched his own jewelry and cosmetics brand. He had three children, and his life looked like what most people envied.

His way to get famous was to appear on prime-time TV and say something outrageous in the show. Lifestyles of the Rich and Famous. He bought a plot of land at the corner of Fifth Avenue. And he really did it: today's Trump Tower. Half apartments, half hotel.

He had no ambition, or so he claimed; others had it, he didn't. After Trump Tower was built, Trump went all out on marketing hype. He said wealthy people and celebrities were all buying apartments from him. Even the Queen of England was supposedly going to come. He certainly knew this was an exaggeration, but the media would only publish sensational headlines to attract traffic. Everyone got what they wanted. In the 1980s, Trump already knew how to tie houses to dreams and luxury goods. What I'm selling you isn't a house. What I'm selling you is the chance to become a top-tier person in New York. At the opening, prices were high too: 1.1 million dollars for a two-bedroom, and 11 million dollars for the penthouse.

Trump also got a government tax-reduction plan. Even smarter was that Trump Tower only had Trump's name on it. Most of the rooms had already been sold, and Trump kept only the management rights and one penthouse apartment.

Trump certainly couldn't sit still afterward. He also built casinos, built an airline, and organized competitions, like Miss USA and TV shows. PR and marketing, but he was not good at management, and that was a hidden danger.

Trump's style was to use high leverage. He opened three hotels in a row, and each hotel had different investors. Back then, some people warned him that the three hotels would compete with each other, and that wasn't necessarily good for Trump. When the last hotel, the Taj Mahal, was about to open, it had already run into a lot of trouble. It still needed 800 million dollars to finish. They scraped together money from everywhere, even taking loans at an interest rate of as high as 14%. When it was finally finished, it ran into the economic crisis of 1987. Many millionaires went bankrupt overnight, and nobody came to the casinos anymore.

The money of three families. The Taj Mahal hotel, the opening crisis, the warning from the finance manager. The 1987 economic crisis.

At the most critical moment, love also took a hit. Ivana, the tough businesswoman, for a while overshadowed Trump's spotlight. Trump's affair within his marriage was discovered. He had to pay 25 million dollars in divorce settlement. Trump was truly bankrupt now.

Trump said to the creditors who came knocking:

Restructure the bankruptcy and convert debt into equity. Keep the management, keep the name. If I really gave up, none of you would get your money back. It's better for everyone to step back a little. Don't chase me so hard, and I'll find a way to earn money again. Once things get better, I, Trump, will definitely pay back what I owe. Trump did not run away in the following period, and the company later even went public.

Back when he was on TV, the host joked that he would become president once he ran out of money. The turning point came in 1999, when Trump's friend, a wrestler named Jesse, with no political experience at all, somehow became the governor of Minnesota. Trump also began to think about getting into politics, but didn't want people to guess.

So he kept popping up every few days with outrageous opinions, then announced a campaign. That's Trump. Even if people curse at him, it's better than being unknown.

While other politicians were laughing at him, and taking him lightly, Trump finally won the 45th presidency of the United States in 2016.

Feeling things out, waiting for the chance, watching how the public reacts. The 45th president.

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