The Trump Era of Crony Capitalism

Donald J. Trump, who relishes nothing so much as a great deal, is setting the stage for an triple avalanche of transactions.

These upcoming deals may first of all make him very rich, next add formidably to the wealth of his children and finally provide a bonanza to a group of vastly rich and fawning tycoons surrounding the Trump clan.

Ignoring government ethics rules

To set the stage, Trump already as President-elect of the United States, is not only ignoring government ethics rules and casting aside standard vetting procedures for his prospective Cabinet members, but also laughing at the idea that he and his children and friends might have conflicts of interest.

Trump will proceed because he relies on Republicans in control of both houses of Congress and the Supreme Court. He can therefore expect few if any checks on his efforts to use the presidency to boost his personal fortune.

Trump Inc.

The rot starts with his 65% shareholding in the publicly listed Trump Media and Technology Company (DJT). The company has failed to make a profit and has tiny revenues of about $3.3 million.

However, investors are betting that DJT will prosper grandly with its chief shareholder in the White House. Accordingly, DJT has a market capitalization of about $7 billion – it is Trump’s largest financial asset.

Trump has no plans to sell his shares. He will remain firmly in control, despite being U.S. President.

Count on him, though, to leverage the value of the shares in the company to acquire businesses. Last week he issued a formal registration that suggests that the company will be investing in a crypto-currency marketing platform.

And you can be assured that large fees will be charged by Trump’s golf clubs, hotels and his Mar-a-Largo home for entertaining “official” guests – all paid for by the U.S. Treasury into Trump’s personal coffers.

Trump Junior Inc.

No individual will be more involved in engineering deals to take the fullest advantage than Trump’s eldest son, Donald Trump Junior.

It is therefore no surprise that, while Don Jr. could have taken an official White House post, as his sister Ivanka did in his father’s first term as President, he announced that he would rather remain in the private sector.

One company emerging from the drawing boards will be engaged in marketing crypto-currencies known as World Liberty Financial. Its flashy website features a large photograph of the President-elect against a black background with the words:

“Inspired by Donald J. Trump”

“Shape a New Era of Finance. Be DeFiant. We’re leading a financial revolution by dismantling the stranglehold of traditional financial institutions and putting the power back where it belongs: in your hands.”

Don Jr. has joined a venture finance firm run by Omeed Malik and Christopher Buskirk, who have assorted investment interests including a company called 1789 Capital that describes itself as “financing companies in the budding Entrepreneurship, Innovation & Growth (“EIG”) economy.”

Meet the Rockbridge Network

Both Malik and Buskirk have been involved in building an organization called the Rockbridge Network, which has been pioneered by J.D. Vance, the Vice President-elect.

The group consists of about 150 millionaires, many of them in their 30s and 40s and hailing from the crypto-currency business world, as well from Silicon Valley technology companies. They all donated to Trump’s election campaign.

According to the New York Times, there was a meeting of the Rockbridge Network in Las Vegas a few days ago that featured Donald, Jr. as a main speaker.

The event also included Susan Wiles, Trump’s election campaign chief and prospective White House Chief of Staff, as well as long-time donor to Republican causes Rebekah Mercer, a Trustee of the Heritage Foundation. The latter is the Washington think tank that has written many of the policy papers now being used by Trump’s transition team.

The 2024 election may be over, but the Rockbridge Network is being maintained and its members will be encouraged to use their money and their business knowledge to work with Donald Jr., Malik and Buskirk on all manner of deals, no doubt with the U.S. federal government.

Of course, all the participants have a powerful common interest to see a massive reduction in government regulation of business.

Musk’s three profiteering motives

Having donated at least $118 million to the Trump campaign, and transformed X (formerly Twitter) into a bullhorn for everything Trumpian, Musk is set to head a White House advisory group that Trump has named the “Department of Government Efficiency.” One can count on Musk to strive to bring a sledgehammer to government regulations.

In that role, he will have three targets. The first one is eliminating regulations on social media companies (think X), the second reducing regulations on self-driving electric automobiles (think Tesla).

The third target is the most lucrative for him of all, simplifying all government regulations relating to U.S. Department of Defense procurement contracting (think Musk’s Space X and Starlink interests).

In addition, Musk is also seeking to use his current influence with Trump to ensure that a number of his top business associates are given key positions in key government departments, most notably the Pentagon.

The goal, I assume, is to strengthen the opportunities for Musk’s businesses to obtain lucrative government contracts.

Not insignificantly, Tesla shares have surged from about $250 on November 5 election day to around $340 today, to bring the market capitalization of the company to $1 trillion. Musk personally owns about 20% of Tesla.

No question, the richest American’s gamble that Trump would win the 2024 election has brought him an the immediate reward via the staggering gain in his own net worth.

Crypto finance

Second only to Musk in betting on Trump with huge campaign contributions and a clear business goal are some of the titans of America’s crypto-currency industry.

A Political Action Committee (PAC) named Fairshake and two related organizations combined to spend about $135 million on Trump’s campaign.

The chief donors are two companies called Coinbase and Ripple, and a venture capital firm, Andreessen Horowitz, which has been a leader in financing new crypto-currency enterprises.

Their goal was to secure assurances from Trump that if he won the election he would move fast to curb the efforts of the U.S. Securities and Exchange Commission and the Justice Department to regulate and investigate the crypto-currency industry.

The leaders of this PAC are most likely to become members of what Trump has announced as a White House “Crypto-Currency Advisory Council.”

Handsome payoffs

Meanwhile, their bet on Trump has paid off well. The share price of Coinbase, for example, has soared from about $183 on election day to around $310 now.

Meanwhile, the most popular of the crypto currencies, Bitcoin, has boomed thanks to expectations of minimal future government regulation, from about $75,000 to over $95,000 since the November 5 election day.

Money and elections

About $16 billion was spent on all the local, State and Presidential elections with about $4.5 billion coming from PACS.

Under U.S. law, PACS can secure unlimited funds – on the grounds, according to the Supreme Court, that any restriction would be a restriction on free speech. They are used intensively by both political camps.

There are very large PACs supporting the Democrats, such as one called Future Forward U.S. that amassed over $500 million, including around $50 million from former New York Mayor Michael Bloomberg.

On the Republican side, there were huge PACS that secured funds from old, long-time conservative billionaires, with Timothy Mellon giving $150 million, Miriam Adelson and the Uhlein family each giving more than $100 million in support of Trump.

These donors are not looking for deals. They are keen to see their deep ideological views on the role of government being implemented in the Trump II era.

There are other elder billionaires and big campaign donors, such as close friends of Trump, such as investor Nelson Pelz and banker Steve Schwartzman, who will not be seeking deals, but who will no doubt be using their White House access to influence government personnel appointments and policies that benefit the finance industry.

Eric’s role

As the mad era of crony capitalism unfolds, Trump will assuredly look after his family. While Don, Jr. is building all manner of new business ventures, brother Eric will be managing the Trump Organization.

As per past practice during Trump’s first term, its properties unsurprisingly will secure considerable government payments, from housing secret service agents in its hotels to renting properties for government agencies.

And finally, Ivanka

Ivanka’s husband Jared Kushner has a private equity company that will find many doors open across the world as he seeks not only to raise more cash from foreign sovereign wealth funds (he started his private equity firm with $2 billion from the Saudis).

Reports have suggested that Jared has had a problem with local authorities in securing real estate for a vast vacation resort in Albania. One telephone call now from the Oval Office to the powers that be in Tirana might pave the way swiftly for Jared to build his hotels.