It is fun to check in from time to time on the slow collapse of Trump's media mini-empire, through the lens of the share price of Trump Media & Technology Group, ticker symbol DJT. This has just hit $17, a steep decline from previous peaks and below the launch price in January. Ass a commercial operation, DJT is a joke, Guardian: "It generated sales of just $4.13m in 2023, according to regulatory filings, and lost $58.2m." Kevin Drum guesses its fair market worth as $70m, based on hopes that Trump will win in November and usage will soar. $17 a share means a notional total value of $3.4 bn. This is obviously a gross over-valuation, propped up by shady plutocrats looking for a tax-efficient and deniable way to pay him a bribe. The negative view is that DJT is not a going concern but the latest and largest of Trump's business scams, and the true value is $0.
For a time, Trump's large stake (59%) in DJT looked like the real wealth - tens of billions - that Trump has vainly pursued all his adult life. His stake has shrunk to under $2bn. If all goes well, he could end up with $40m or so, a respectable haul for a grift, but not superyacht wealth. Or nothing, if the book-cooking has crossed the line into securities fraud, which would not be surprising.
Trump could cut his losses, or broken dreams, earlier by selling up. Two problems here. He is prevented by earlier undertakings from selling stock before late September. His flunkies on the board will jump at his bidding, but they have their own civil criminal liability to think of. More important,, he would crash the stock, slashing the total sum realized. Any significant sales of stock by Trump will be read, and mercilessly amplified by the Harris-Walz campaign, as jumping ship and leaving small MAGA co-investors to their fate. My guess is that he will wait till after the election. But he's a demented sociopath facing ruin, and predictions based on rational behaviour are not worth much.
For practical purposes, all government deficits are financed by debt. So, the deficit in any given year equals the increase in debt in that year.
Important to observe that neither deficits nor debt are necessarily bad. In fact we would commonly expect government debt to grow line with GDP or national income, which implies that the budget should normally be modestly in deficit.
Agree. Modestly means Deficits < Σ(expenditures with NPV>0) with the beauty of this formulation being that in recession Σ(expenditures with NPV>0) increases "immodestly" :) giving a result t hat looks like Keynesian stimulus
"..The deficit in any given year equals the increase in debt in that year." With qualifications. The debt total is not the sum of past deficits, for two reasons. Interest rates vary over time, so the current value of old bonds is adjusted by the market to give equal yields to new ones.
Second, while national Treasuries normally issue new bonds today at close to par value, adjusting the interest rate accordingly, this is just a practice and it wasn't always followed. You often see the remarkable statement that British government debt was 290% of GDP in 1815 (or some other very high number) The problem with this is that the British Treasury, starting in the 1750s, primarily sold consols (perpetual bonds) at a fixed rate of 3.0%. This was administratively very convenient, and created a huge pool of very liquid assets, as new and old consols were perfect substitutes. The market interest rate went up and down, and new consols were simply sold at the going rate, sometimes at a huge discount. The book value of the whole pool of consols generated since 1751 bore only a very approximate relation to the huge sums actually raised to ensure that Britannia ruled the waves. But nobody cared about this. Consols had no redemption date or value, and holders like Jane Austen's Mr. Bingley thought of them as a guaranteed income stream rather than a tradeable asset.
We should follow him and his friends in worrying more about about the sustainability of debt service than about their never to be repaid nominal or market total.
It is very likely that the National Accounts figures, released this week, may indicate that the Australian economy is stagnating in real terms. There may be a positive increase but it’s unlikely to be much more than the inflationary effect. Real growth would need an increase in money GDP of over 4 percent pa to avoid a fall in real GDP.
Then there is GDP per capita to consider. It’s no good having an overall rise in Gross Domestic Product if there is no maintenance of growth per person. Some anecdotal evidence may indicate, to the casual observer, that mortgage holders are experiencing a reduction in their standard of living. Whereas net savers may be doing better under a regime of high interest rates, those with close to zero savings may be doing a lot worse. This may impact their net household wealth.
All this begs the question: When will the RBA remember that they are supposed to stabilise the economy NOT send it into a recession.
It is fun to check in from time to time on the slow collapse of Trump's media mini-empire, through the lens of the share price of Trump Media & Technology Group, ticker symbol DJT. This has just hit $17, a steep decline from previous peaks and below the launch price in January. Ass a commercial operation, DJT is a joke, Guardian: "It generated sales of just $4.13m in 2023, according to regulatory filings, and lost $58.2m." Kevin Drum guesses its fair market worth as $70m, based on hopes that Trump will win in November and usage will soar. $17 a share means a notional total value of $3.4 bn. This is obviously a gross over-valuation, propped up by shady plutocrats looking for a tax-efficient and deniable way to pay him a bribe. The negative view is that DJT is not a going concern but the latest and largest of Trump's business scams, and the true value is $0.
For a time, Trump's large stake (59%) in DJT looked like the real wealth - tens of billions - that Trump has vainly pursued all his adult life. His stake has shrunk to under $2bn. If all goes well, he could end up with $40m or so, a respectable haul for a grift, but not superyacht wealth. Or nothing, if the book-cooking has crossed the line into securities fraud, which would not be surprising.
Trump could cut his losses, or broken dreams, earlier by selling up. Two problems here. He is prevented by earlier undertakings from selling stock before late September. His flunkies on the board will jump at his bidding, but they have their own civil criminal liability to think of. More important,, he would crash the stock, slashing the total sum realized. Any significant sales of stock by Trump will be read, and mercilessly amplified by the Harris-Walz campaign, as jumping ship and leaving small MAGA co-investors to their fate. My guess is that he will wait till after the election. But he's a demented sociopath facing ruin, and predictions based on rational behaviour are not worth much.
What is the difference between a Federal Government debt and deficit? Some journalists appear to equate them. -- Hedley
For practical purposes, all government deficits are financed by debt. So, the deficit in any given year equals the increase in debt in that year.
Important to observe that neither deficits nor debt are necessarily bad. In fact we would commonly expect government debt to grow line with GDP or national income, which implies that the budget should normally be modestly in deficit.
Agree. Modestly means Deficits < Σ(expenditures with NPV>0) with the beauty of this formulation being that in recession Σ(expenditures with NPV>0) increases "immodestly" :) giving a result t hat looks like Keynesian stimulus
"..The deficit in any given year equals the increase in debt in that year." With qualifications. The debt total is not the sum of past deficits, for two reasons. Interest rates vary over time, so the current value of old bonds is adjusted by the market to give equal yields to new ones.
Second, while national Treasuries normally issue new bonds today at close to par value, adjusting the interest rate accordingly, this is just a practice and it wasn't always followed. You often see the remarkable statement that British government debt was 290% of GDP in 1815 (or some other very high number) The problem with this is that the British Treasury, starting in the 1750s, primarily sold consols (perpetual bonds) at a fixed rate of 3.0%. This was administratively very convenient, and created a huge pool of very liquid assets, as new and old consols were perfect substitutes. The market interest rate went up and down, and new consols were simply sold at the going rate, sometimes at a huge discount. The book value of the whole pool of consols generated since 1751 bore only a very approximate relation to the huge sums actually raised to ensure that Britannia ruled the waves. But nobody cared about this. Consols had no redemption date or value, and holders like Jane Austen's Mr. Bingley thought of them as a guaranteed income stream rather than a tradeable asset.
We should follow him and his friends in worrying more about about the sustainability of debt service than about their never to be repaid nominal or market total.
We should aim as optimality, not sustainability. https://thomaslhutcheson.substack.com/p/debtpocalypse
It is very likely that the National Accounts figures, released this week, may indicate that the Australian economy is stagnating in real terms. There may be a positive increase but it’s unlikely to be much more than the inflationary effect. Real growth would need an increase in money GDP of over 4 percent pa to avoid a fall in real GDP.
Then there is GDP per capita to consider. It’s no good having an overall rise in Gross Domestic Product if there is no maintenance of growth per person. Some anecdotal evidence may indicate, to the casual observer, that mortgage holders are experiencing a reduction in their standard of living. Whereas net savers may be doing better under a regime of high interest rates, those with close to zero savings may be doing a lot worse. This may impact their net household wealth.
All this begs the question: When will the RBA remember that they are supposed to stabilise the economy NOT send it into a recession.