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- [00:01]
Narrator
From Tokyo, Japan and Auckland, New Zealand, this is down to Business English with your hosts, Git Montreux and Samantha Vega.
- [00:13]
Git Montreux
Hello, Samantha. How are you today?
- [00:16]
Samantha Vega
I'm doing all right. I am moving, though.
- [00:18]
Git Montreux
Oh.
- [00:19]
Samantha Vega
And you know how, you know how difficult it is to move and getting everything in order and stuff. But you know what? I'm leaving Auckland and we're moving about five, six hours away from here to smallish little town about population 60,000. But looking forward to getting out of Auckland and looking forward to change. I do like change. Looking forward to the new change.
- [00:41]
Git Montreux
Well, there seems to be a lot of that going on around the world these days. A lot of change. Just look what happened in the UK recently with the Brexit.
- [00:50]
Samantha Vega
Oh, my goodness. That was a surprise. Obviously. Not just to me, wasn't it?
- [00:56]
Git Montreux
Yeah, it was a huge surprise.
- [00:58]
Samantha Vega
And, you know, especially to the financial markets, they were taken by surprise. I was surprised that they were taken by such surprise, actually. But yeah, it is kind of sad now looking at it now. One of the initial reactions, I mean, it's going to be going on forever. But one of the initial reactions is the racism that it's bringing forth in the UK towards immigrants.
- [01:21]
Git Montreux
Well, racism or at the very least, xenophobia. And there seems to be a lot of this fear of the outside or fear of foreigners going around. Just look what's happening in the presidential race in the United States. Donald Trump is really playing that same kind of race card or xenophobic fear card.
- [01:44]
Samantha Vega
And wasn't it just such a coincidence that Donald Trump happened to be in Scotland? The reopening of his golf course the day of the Brexit vote, that was
- [01:52]
Git Montreux
unbelievable how he put himself right in the center of this European crisis. That was not a coincidence.
- [01:59]
Samantha Vega
No. I'm sure he had some advisors that were telling him that that was the way to go. But Scotland, after seeing various things on Facebook and on the news, Scotland surely doesn't want him there.
- [02:11]
Git Montreux
No, not at all. I think I posted something on the down to Business English Facebook page about a Scottish resident who is planting Mexican flags around the Trump golf course.
- [02:23]
Samantha Vega
Didn't you and Des recently do a post about Donald Trump?
- [02:27]
Git Montreux
Well, not so recently, but we did a story on Donald Trump. It's back in down to business English episode 30. We did a story on him when he was running for or thinking about running for president back in 2012. But that story really looked at Donald Trump his whole career as a businessman. I thought today we could focus on what a poor businessman Donald Trump is and look at his business bankruptcies.
- [02:58]
Samantha Vega
Well, that sounds good.
- [02:59]
Git Montreux
Okay, well, then let's do it. Let's get D2B with Donald Trump. The bankrupt billionaire. Donald Trump really puts himself out there as a great business person, but the fact remains that he has declared, or his companies have declared bankruptcy four times, and they are all revolving around his involvement in the casino industry in Atlantic city in the 1980s and 1990s.
- [03:41]
Samantha Vega
Yeah, I had a stint for a while there watching Boardwalk Empire, which was talking about the. The show was about the heyday of Atlantic City when it was really popular. But Atlantic City is not as big as it used to be. Well, definitely not these days. But it was known for its boardwalks and casin in the state of New Jersey. It's a couple of hours drive south of New York City.
- [04:01]
Git Montreux
That's right. And Donald Trump, being a New York real estate developer, he managed to purchase some prime real estate on the Atlantic City boardwalk. But unfortunately, he couldn't raise the funds to build a casino. So he partnered up with Harrah's Entertainment, which was a national gambling operator, and they partnered up to build a casino.
- [04:26]
Samantha Vega
Yes, he had the backing of an established player in the market, so he was able to move himself forward. But what were the terms of the partnership?
- [04:35]
Git Montreux
It was a very good deal for Donald Trump. The final terms were Harrah's would pay $220 million to build the casino. Of that money, Trump would get 24, $25 million to actually do the building. And when the casino would open, Trump would get 50% of all the profit, and his name got to go up on the building. They named it the Trump Plaza.
- [05:03]
Samantha Vega
Yeah, well, whatever you think about Donald Trump, he is good at negotiating. That's a great deal for him. You can actually read about how he manipulated Harris in his book, the Art of the Deal.
- [05:14]
Git Montreux
Yeah, there are many stories in that book about how he manipulated Harrah's in that deal. But anyway, there were a lot of casinos in Atlantic City at that time. In fact, Hilton Hotels was building a casino, but they found themselves in a position where they couldn't get a license from the New Jersey government, so they couldn't actually open the casino. So Trump dived in there and bought the unfinished hotel and casino and named it the Trump Castle.
- [05:48]
Samantha Vega
What an enormously pompous name.
- [05:51]
Git Montreux
Well, it is a pretty ugly name. They did later rename it to the Trump Marina, which isn't so much better.
- [05:58]
Samantha Vega
But before he could open that, he had to finish rebuilding it.
- [06:02]
Git Montreux
Yes, he did. And once again, he had to find the money to do that. So he ended up raising something like $350 million by issuing bonds.
- [06:14]
Samantha Vega
Yes. He raised the money to finish building the casino. And how the bonds, it's like an issue of debt, like an IOU with interest. So Trump used his charisma and his fame to sell the bonds the public could buy. These bonds had an extremely high interest rate of 15%. Very poor ratings from agencies like Moody's. And these were known as junk bonds. Trump used his personal fortune to guarantee the payment.
- [06:40]
Git Montreux
That's right. And so the Trump Castle opened in June of 1985. But suddenly Trump has two casinos, and his partner over at Harrah's was very, very upset.
- [06:53]
Samantha Vega
Yes, without a doubt. They were in direct competition. A bit of a conflict of interest there, you could say. Playing both sides of the fence.
- [07:00]
Git Montreux
Absolutely. So within a year of opening the Trump Plaza, Harrah's Entertainment picked up and walked out of the deal. They sold their stake in their partnership with Trump to him for $220 million and were done with him. Wow.
- [07:16]
Samantha Vega
And then he had two casinos, both with his name on them.
- [07:19]
Git Montreux
That's right. And he didn't stop there. So at that time, he started to get involved in the Taj Mahal. Have you heard of that casino?
- [07:27]
Samantha Vega
Oh, yes, the Taj Mahal. Resort International. Very famous.
- [07:30]
Git Montreux
Yes. Well, actually, the Taj Mahal was the initial construction was started by the company, Resort International. And when their founder passed away, Trump made a bid to take over the company. At first, he bought a controlling interest in the company and then tried to buy out the remaining shareholders. Now a very, very famous celebrity, Merv Griffin was one of those shareholders, and he was not happy about that at all. And he got into a quite a public fight over the ownership of Resort International. And it dragged on for a couple of years. But in the end, Merv Griffin did win and got control of the company, Resort International. But Trump got to walk away with the Taj Mahal. But again, he needed money to finish
- [08:24]
Samantha Vega
building it, and it worked for him the first time. So then, like deja vu, he did it all over again. He issued junk bonds, 675 million of them at 14% interest. Even before opening, it was estimated that the casino needed to bring in $1.3 million, a 1.3 million in just one day to pay the interest to bondholders.
- [08:47]
Git Montreux
Yeah, quite amazing. So the Taj Mahal finally opened on April 2, 1990.
- [08:55]
Samantha Vega
So to summarize this, in the early 90s, Trump had three casinos. All of them were heavily leveraged. The US was in a recession, wasn't good. In just five years, he had come up with three casinos and had just painted not a very pretty financial picture at all.
- [09:14]
Git Montreux
Not pretty at all. In fact, In November of 1998, months after opening the Taj Mahal, he missed the very first payment to bondholders. His other casinos were missing payments as well. So he was just bleeding money. There's a very famous story of Trump's father sending one of his lawyers into the Trump Castle to purchase $3.3 million in casino chips. Just inject some cash into the business. Obviously, investors were furious and there were many lawsuits. And Trump was forced to sell some of his other assets, some property in Manhattan. Very famously, he had to sell the Trump Shuttle, his airline, Eastern Seaboard Airline. So he was really bleeding financially.
- [10:02]
Samantha Vega
Yes, I remember that. I remember the story of Trump's his homeless man comment that he made to a friend as they walked down the street in New York City. He said, see that homeless guy? He has $1 billion more than me.
- [10:15]
Git Montreux
So he, yes, very, very famous quote.
- [10:18]
Samantha Vega
He did manage to slide his way out of it again. Now, how did he get out of it?
- [10:22]
Git Montreux
Basically, what he did was form a company called Trump Hotels and Casinos and transferred all of his personal debt into that company. Then in 1995, he took that company public and used the money raised from selling shares in the company, his bondholders, or in other words, pay his own personal debt. Obviously, this system of stealing from Peter to pay Paul is unsustainable. And eventually he had to file for bankruptcy. In fact, he filed for bankruptcy a total of four times. Once in 1991, again in 1992, 2004, and most recently in 2009.
- [11:09]
Samantha Vega
That's just incredible. When you file for bankruptcy, you don't have to pay back the people that you previously ow money to. That's why he kept doing it. That really put a lot of smaller businesses that Trump dealt with during his various casino constructions in dire straits. It's just not good business. But how did Trump manage to benefit from any of it?
- [11:29]
Git Montreux
You'd think it's pretty amazing where he stands today after basically screwing so many people out of their investment. But the fact is that each time he raised money through a bond, through selling bonds, he took some of that money and invested it in New York real estate. He always paid himself. There was a very famous incident of him paying himself a five million dollar bonus even though one of the casinos was losing money. And he also used his companies to charge the casinos for their services. Companies like the Trump Shuttle, which transported guests to the casinos, Trump Water, which sold all their water to the casinos. And of course, the Trump Construction Company built the casinos.
- [12:20]
Samantha Vega
So he just covered his back by taking care of his needs first and foregoing everyone else's. That's just great.
- [12:27]
Git Montreux
Yes. And now he wants to make America great again.
- [12:31]
Samantha Vega
Yes. Well, that is his political catchphrase after all. Well, before he does that, let's get D2V down to vocabulary.
- [12:49]
Narrator
Down to Business English audio scripts are a great learning tool. Be sure to visit the D2B website and download your free audio script of today's podcast, DowntoBusinessEnglish.com that's www.downtobusinessenglish.com.
- [13:12]
Git Montreux
Just before we get started today, I'd like to make a little bit of an announcement. Starting from this episode, D2B audio scripts will now contain links to dictionary definitions of each of the vocabulary words we discuss. So now, in addition to listening to us explain new words and phrases, you can download the audio script, click on the Words link, read another explanation and other examples, bookmark it, and review the vocabulary as often as you would like.
- [13:45]
Samantha Vega
That sounds like a very efficient study tool. Review is so important when you are trying to activate a larger vocabulary.
- [13:52]
Git Montreux
Absolutely. And we will be using a variety of online sources such as the Merriam Webster Student Dictionary and the Free Online Dictionary by Farlex, as well as many others. So I think listeners will find the audio scripts even more useful than they already are.
- [14:12]
Samantha Vega
Very cool.
- [14:13]
Git Montreux
I think. So, Samantha, are you going to start us off today?
- [14:17]
Samantha Vega
Sure. Let's begin with the phrase to take someone or something by surprise. When you do something unexpectedly that surprises people, you can say you took them by surprise.
- [14:28]
Git Montreux
The preposition by is very important, isn't it?
- [14:31]
Samantha Vega
Yes, it is. We should also point out that it is quite common to use this idiom in passive voice, as I did in today's story. I said that the financial markets were taken by surprise by the results of the UK Brexit referendum.
- [14:45]
Git Montreux
In other words, the Brexit decision surprised the world stock markets and they all took a nosedive.
- [14:52]
Samantha Vega
Precisely. Can you give us a business example? Skip?
- [14:55]
Git Montreux
I think so. Many of our listeners are salespeople. They spend a lot of their time preparing cost estimates for their clients. It is important that they don't make any big mistakes. Otherwise their customer will be taken by surprise when they see their final bill.
- [15:13]
Samantha Vega
That reminds me of one time when I got my credit card statement. I had purchased something online the month before and the company made a mistake in their billing. Instead of charging me $20, they charged me $200. Needless to say, I was taken by surprise.
- [15:27]
Git Montreux
I hope you didn't pay it.
- [15:30]
Samantha Vega
Oh, no. One quick call to their customer service line and the mistake was cleared up in the end. I had a very positive experience with that company.
- [15:37]
Git Montreux
That's good to hear. It sounds like they, like any good company, understand that business success revolves around a happy customer.
- [15:47]
Samantha Vega
Yes, the customer is always right.
- [15:50]
Git Montreux
And that happens to be our next phrase to revolve around something. When we say a person or thing revolves around someone or something else, we are communicating that their or its existence depends on that other person or thing. In the story, I reported that all of Donald Trump's bankruptcies revolved around the casino industry. In other words, each time he declared bankruptcy, it was for one of his casinos, not one of his other businesses.
- [16:23]
Samantha Vega
In many companies, the employee bonus system revolves around performance. Sometimes it is individual performance, other times it is the performance of the team.
- [16:32]
Git Montreux
Here in Japan, bonuses traditionally revolve more around overall company profits and employee seniority, which I think is a pretty good system actually. But let's move on.
- [16:45]
Samantha Vega
Sure. Next, let's look at the expression to play both sides of the fence. This means that you support two sides of a competition in a way that benefits you. In the story, after Skip explained how Trump became the owner of two competing casinos, I commented that he was playing both sides of the fence. In other words, he was benefiting even though his companies were competitors.
- [17:07]
Git Montreux
Here is another example of playing both sides of the fence. A long time ago, before I became a corporate language trainer, when I lived in Canada, I used to have a blue collar job.
- [17:19]
Samantha Vega
Really? What did you do?
- [17:21]
Git Montreux
Believe it or not, I drove a forklift in a warehouse. I was a very, very bad forklift operator, but I did drive a forklift. Anyway, in that warehouse, there were union jobs and management jobs and each side really did not trust the other.
- [17:39]
Samantha Vega
That doesn't sound healthy.
- [17:40]
Git Montreux
It wasn't. The union workers did not mix with the management and vice versa. But there were a few guys who played both sides of the fence. They were in the union, but at lunchtime and on breaks, they could be seen in the cafeteria eating with the managers. When it came time for promotions, they were the first to be given higher paying positions.
- [18:04]
Samantha Vega
Ah, so playing both sides of the fence turned out well for them.
- [18:08]
Git Montreux
In a way, yes, they did get the promotion after all. But after that, most of the other union workers completely ignored them.
- [18:18]
Samantha Vega
Just goes to show that playing both sides of the fence can be risky.
- [18:22]
Git Montreux
Shall we move on yes, let's Next, I want to explain the phrase to get out of something. This simply means to avoid either doing something you don't want to do or that you are responsible for. In our discussion, Samantha asked me how Trump got out of his financial difficulties. In other words, she was asking how Trump was able to avoid paying money he owed to lenders.
- [18:49]
Samantha Vega
Just think of the Panama Papers, that huge leak of financial information that showed the world just how many corporations and wealthy people are trying to get out of paying their share of taxes.
- [18:59]
Git Montreux
Nice example. We will most certainly do an in depth report on that topic in the near future. Governments around the world are losing hundreds of billions, if not trillions of dollars in tax revenue due to those offshore tax havens.
- [19:16]
Samantha Vega
And do you know what those governments have to do because of this legal tax avoidance?
- [19:20]
Git Montreux
Cut back on spending?
- [19:21]
Samantha Vega
Well, yes, that too. But in addition to cutting back, they have to steal from Peter to pay Paul.
- [19:27]
Git Montreux
And that is our next expression, isn't it? To steal from Peter to pay Paul?
- [19:32]
Samantha Vega
Yes, it is. To steal from Peter to pay Paul is an old expression that goes back to the 16th century, when church taxes collected in England had to be paid to St Peter's Church in Rome and St Paul's Church in London. Many people would ignore the St Peter's tax in order to pay the St Paul's tax because they didn't have enough money to pay both.
- [19:53]
Git Montreux
Kind of like what is going on today with the Brexit, if you think about it.
- [19:58]
Samantha Vega
I guess so.
- [19:59]
Git Montreux
But nowadays this phrase simply means to borrow money from one source to pay off a loan or other debt. So in fact, you still owe the same amount of money?
- [20:09]
Samantha Vega
Basically, yes. In the story, Skip used this phrase to describe Trump's system of raising money by listing his casinos on the stock exchange and then taking that money to pay the private bond holders. In other words, he was paying one debt by creating another debt.
- [20:26]
Git Montreux
You know, I use this expression a lot in my life, and I did not know where it originated from. I often steal from Peter to pay Paul. If I am ever a little short on cash before payday, I borrow money from my savings account until I receive my salary and then I pay that personal loan off.
- [20:46]
Samantha Vega
You have a savings account? Good for you.
- [20:49]
Git Montreux
Not really. That was more of an example than reality.
- [20:53]
Samantha Vega
Well, we all have to do a little stealing from Peter to pay Paul from time to time, I guess. What's the next word, Skip?
- [20:59]
Git Montreux
Finally today, I have one of my favorite expressions to be in dire straits. Let me break that down a bit. The noun Strait is a small channel of water that connects two larger bodies of water. The adjective dire is a synonym of words like dangerous or serious or extreme. Imagine that you were in a boat and the boat was going through a strait of water and suddenly a storm comes up and because the strait is so narrow the waves are crashing over the boat. You are very close to sinking. The situation is very dangerous and extreme. You are in dire straits.
- [21:46]
Samantha Vega
In the story I said that Donald Trump put many people in dire straits when his casinos went bankrupt. Another way to say this is that Trump put people and companies in a very dangerous financial situation by not paying them the money he owed them.
- [22:01]
Git Montreux
This expression is often used with money or finances. For example, the economic crisis in Argentina is putting many people out of work and inflation is raising prices of basic necessities. Because of all of this, many, many families are in dire financial straits at the moment.
- [22:22]
Samantha Vega
I was watching a BBC report about that recently and it is really unbelievable to see what is happening to their economy. Quite the hardship for people, you know
- [22:31]
Git Montreux
Samantha, with the aging of Japan's population and its huge national debt, with America's 20 trillion dollar debt and China's ever slowing economy, I sometimes wonder how long it'll be until the entire planet is in dire straits.
- [22:56]
Narrator
Would you like to support down to Business English? Be sure to visit the D2B page in iTunes and subscribe to the show. While you are there, why don't you leave a rating and a comment? This will help D2B reach more people wanting to improve their business English skills. Down to Business English Business News to improve your Business English.
- [23:34]
Git Montreux
Samantha it was very nice to once again speak with you. Thank you for all your help on today's report.
- [23:41]
Samantha Vega
You are more than welcome Skip, and
- [23:43]
Git Montreux
thanks to everyone who has downloaded D2B today. We hope you found the story interesting and we will be back with a new episode in the very near future.
- [23:53]
Samantha Vega
Take care everyone.
- [23:54]
Git Montreux
See you next time.
- [24:01]
Narrator
Have a comment or question about today's show? Don't be shy. Visit the D2B website or the Facebook page and post any comments or questions there. Skip, Des or Samantha will be sure to leave a reply. Want to get even more down to Business English? Sign up for the D2B Newsletter and receive updates on some of the stories covered on down to business English. That's www.downtobusinessenglish.com down to business English Business News to improve your Business English.
- [24:53]
Samantha Vega
Sam.