NextBurgh, PA          @VannevarB      About      Pittsburgh Murals
December 02, 2015

Donald Trump and the Convention Delegate futures market: the biggest real estate deal ever

What does a real estate developer do? They purchase a significant property and either sit on it until it becomes much more valuable, or work on the property and environment until the property becomes much more valuable. Then the developer sells to a buyer at a premium. The Buyer believes that they will get more value out of the property than the purchase price.

Why does the developer sell to the Buyer, rather than keep it and just do whatever the Buyer is going to do? The developer has different skills and goals from the Buyer.

Why do both the Developer and Buyer participate and exchange fortunes for the property? Usually because there is a limited supply of it, and a changing economy makes it more valuable. Hence: land, which they're not making any more of.

Donald Trump is a developer who has pivoted into a new market which is also based on a commodity of fixed supply: Presidential Convention Delegates. Delegates are important, get to select the Party's candidate for the Presidency, and there's only a fixed supply of them. Imagine the economic advantages of cornering the market in Convention Delegates. It's a niche market but lucrative.

Consider if you will, that Trump is just building out his property (his share of the electorate) and developing it as an investment. He really doesn't want to be President; he's much better off simply selling the Presidency.

One of the advantages of running as a Developer rather than as a potential President is: you don't have to worry about delivering on promises, or about leading in an environment shaped by your statements. You can say things like "register the Muslims", "deport the Mexicans", etc - nothing's going to come out of that other than appreciation of the property.

Right now, the grueling Republican presidential primary is a slugfest - Rubio, Cruz, Dr. Carson, Trump bleeding each other. Imagine a walk-on candidate that arrives in the later stages of the primary (for instance, Mitt Romney). By skipping most of the slugfest, he's undamaged, serene, "tanned, rested, and ready" and he's been isolated from gaffes like "companies are people, my friend".

The Republican establishment - which is more interested in their organization than the United States, just like the toadies of any organization - is scared of Trump. They're going to want somebody to replace Trump. The stage is set; all that's to be done is negotiating the price.

Whoever meets the Donald's price will have a majority of convention delegates. Trump doesn't have to win the election; in return for about 18 months of speechifying, he'll get a large amount of money. Even if he only gets half of the Republican's advertising budget it's a great return on 18 months of self-indulgence and brand-building.

It would make sense to a financier like Romney. Trump is building a futures market for convention candidates. He's bundling them up, just like bundled derivatives. The Buyer, Romney, will find sufficient value in Trump's offering; he'd rather Trump did that work for him, and he believes he can do more with the Presidency than Trump.

Financiers are funny people, always working arbitrage on subtle effects at a grand scale. Once the Supreme Court ruled in Citizens United that Corporations could buy elections, it makes sense that one or more financial entities would start investing in election deliverables, offering complex products like bundled Convention delegates.

Trump will offer the Buyer a prepared theater; after Trump, Brand-X will seem like a reasonable, civilized Regular Joe. It's just like a Pro-Wrestling Tag Team (another TV product). There's no way that Jeb! Bush has prepared to beat a market developer like Trump; Bush is fighting last century's campaign while Trump is defining this century's campaign.

It doesn't have to be Romney; the great thing about real estate and mindshare is that eventually, somebody will pay you more for it than you paid, because they believe they can do more with it. The Donald is playing the game that Citizens United defined, and he's making it look easy. That's what Donald Trump does.

In a way, Trump is a real estate developer selling the biggest project ever: the United States.   Like a lot of Developer projects, this one will result in Gentrification - but Gentrification of America. The first Republican primaries are in nine weeks.

0 comments:

Post a Comment

Comments and Feedback? Love that stuff. Please leave your thoughts in the box below--