Zell: Law Professors Shouldn’t be Presidents
Sam Zell, Equity Group Investments chairman, reveals his top commercial real estate investments; where to find emerging market opportunities; his outlook on the U.S. economy; and thoughts on presidential politics.
Last year was a banner year for hedge funds in general, as the industry attracted $31 billion worth of net inflows, according to data from HFM. That total included a challenging fourth quarter, in which investors pulled more than $23 billion from hedge funds. HFM reported $12 billion in inflows for the first quarter following Read More
Zell: What We Need Now Is a Politician
Sam Zell, Equity Group Investments chairman, discusses the leadership skills needed for the next president.
Zell: Falling Off ‘Fiscal Cliff’ Could Be Good for US
Zell: ‘The Game Is Being Stacked Against Me’
“Unleash the animal spirits of America, unleash the small businessmen, unleash people like me,” said Sam Zell, Equity Group Investments chairman, talking about allowing Americans to “get back to business.”
justify kicking the can down the road or not doing things is yousay oh my god, it’s structural. it’s this, it’s that. i mean, unleash the animal spirits of america. unleash the small businessmen.unleash people like me, okay? i’m a very wealthy man. i could literally put my money into the bank and play golf every day. god forbid. but i could do that. instead, i’m taking risks every day.why? why should i? if the game is being stacked against me so what this country needs is a clear, an all clear sign and all clear, let’s get back to business. that’s what creates jobs, let’s get back to business? stop this class warfare crap, stop this politics and envy, and in effect deliver a position to the american people that says we have to drive a center, which is what we have done since the beginning of this country and what has led to its success. there are things you haven’t done, sam, are there? you are taking risks. oh, sure, in this environment, i mean, you know, we’re watching liquidity like a hawk because there’s great sense tomorrow morning it could go the other way, in effect you don’t invest as much, you don’t take as much risk.how would you counter the argument that businesspeople andthe wealthy have had their way for the past 2030-years asthey’ve increased their lead in terms of income disparity andgotten richer and richer, and you would have hoped that someof that would have trickled down, if it works you would havehoped the average person would have participated in the goodtimes and haven’t and you need a president that is going to come in for the powerless people that aren’t able to set policy and pay to go do things and you need someone that will represent them in the future. how was is that pretty damnedgood? yes, sir. you can take this. thank you for writing it for me.i’ll get you a job at the new york times. the reality is as follows.the whole focus has been on how the quote, one percenters or ten percenters, how the top earners moved ahead of everybody.is there any correlation between while they were moving ahead the rest of the government was subsidizing and subsidizing more and more disincentivizing them. why is it always assumed somebody doesn’t succeed because he can’t as opposed he doesn’t want to. because the opportunity is not there and it’s not a fair playing field which i’ve heard for the last two years. i’m sorry, i live with the playing field every day. i finance people starting new businesses, taking all kinds ofrisk. their motivations are the same as everybody’s since thebeginning of time. there are people who have done multiple studies on upward mobility and there’s no suggestions i’ve heard that the reason why people have had a harder time rising through the ranks today is a function of the fact disincentivized in the rise to the ranks. wait a minute, i think they are disincentivized by in effect if you don’t have to pay for your health care it’s another thing you don’t have to worry about. you wouldn’t make that argument about europe. how successful europe has been. it’s the difference between earned success and now i’m back on the difference between earned success and learned helplessness. we’re learning helplessness andlearning it really well because we have a great heteacr. all i’m saying is that, go back in history. show me any country in the world that has progressed successfully without engaging the animal spirits of their people, and without creating opportunity for their people to excel and push the envelope. i’ve had these toqueville quotes up, once you know you can get 50% of the vote, it’s hard to, you know, it’s hard to screw that up and not get reelected when it and again and again. you don’t think there’s been so many benefits, and this is why i think to the extent wetalked about earlier, to the extent people looked at mitt romney’s taxes there have been so many benefits built into the tax code and other things to help continue to the sort of progress at the time. for every step there is is an additional step on the bottom to increased the earned income, to extend unemployment insurance for 28 years. that is what’s maybe helped no, i don’t think there’s any correlation. meaning the fact that we’veflooded the system with so much cash — andrew, the world is not a zero sum game. if i succeed, it doesn’t mean that you don’t. i succeed because i’m driven and i take the risks and deal with it. you succeed because you’re driven similarly. and that’s fine. but that’s what it’s ball. that’s what it’s always been allabout. i don’t disagree with you for one second. we have to run to a break but there is an issue of what’s happened with globalization and technology, all of these things which displaced people at the lower end, so there are structural issues that i hope you agree there are some structural issues beyond welfare. there are structural issues all the time, okay.there isn’t an extra special number of structural issues today versus yesterday. go back to teddy roosevelt and the trust buster days. there were structural issues that created that situation.there were structural issues when fdr started the new deal.there are always structural issues. the question is what are thesolutions? sam, you’ve talked about the education system. i haven’t even begun to start on that subject. i mean the idea that we instead of saying this country’s standard must be the highest educational level in the world, the standard is, how do we keep the greatest number of failing teachers in place so we can be fair? well, that’s not fair. if you’re educating a kid fromthe hood and he wants to learn, and instead of getting a teacherwho wants to teach you, he gets a teacher who views your job orhis job as a custodian, that’s not fair. that’s — what is happening at the educational level of our country, in particular in the have nots, is, you know, is racist, is unfair, it’s everything you can imagine, because you’re dooming these children. at least you fixed it in chicago. right. oh, yeah. we’re going to have a lotmore with sam as the program progresses.
QE3 Catches Up With Real Estate: Zell
“We are beginning to see the excess flow of capital; we’re seeing too much capital chasing too few opportunities,” said Sam Zell, Equity Group Investments chairman, talking about the impact of QE3 on real estate and stock markets.
500 up as well. for the next two hours we are joined by one of the top real estate investors in the world. we are lucky enough to have sam zell, the chairman and co-founder of equity groupinvestments here on set. thank you for coming in today. my pleasure, it’s fun. nobody knows real estate like you do. we’ve been watching a lot of different things play out in this space.you were talking with joe off camera about qe3 and what youthink about the fed’s latest move. how does that shake things up in the real estate world? what does it mean for investing on the commercial and residential side? the best answer i’d give you is that we were beginning to see the excess flow of capital,we’re seeing too much capital chasing too few opportunitiesand consequently i think number one the effect of qe3 is nothingmore than pushing up the stock market and yet the stock market is being pushed up at record levels of limited trading.we have low volumes and the market goes up, which ismanipulation but it’s a function of the fact, what’s anybody going to do with money and nobody has any confidence in the future, so you limit your money to liquid. procter & gamble, anything that has a dividend is basically jumped for because there are no other alternatives. look at your capital numbers last week.nobody wants to make commitments beyond tomorrow. we run a company that does a lot of corporate enterprise installations and one of their triggers is when the enterprise projects start getting delayed, we’re heading for a recession, and that’s exactly what you’re looking at right now. you’re looking at capitalexpenditures across the board being deferred and beingdeferred for a very good reason. they have no confidence.there’s nothing that’s going on now, qe3 or nlrb, that ain’tbuilding confidence. did theve any certainty when election comes? i think the answer is the certainty of the election is that it will be over. which ever guy wins is going to have to do an enormous amount of stuff very immediately and very hard and based op. all of the other stuff we’re looking at it’s hard not to assume we’re on the cusp of going back in a recession. that’s frightening. well it’s, the word frightening is too strong. the reality is that business is all about cycles. we did through positive and negative cycles and the opportunity for us is to takeadvantage of a positive cycles, so mitigate the negative cycles.what we’ve just come through is four years of a positive cyclethat has been limited dramatically by political action. that’s scary and that’s not what’s supposed to happen. we didn’t get the bounce back that we were — well, we created so manyheadwinds. we created so many issues and the environmental protection agency and you’d think on what it does t isn’t part ofamerica’s education. nobody, no president, not me, not any other president could have done any better over the last four years, given what he was handed in this, when you heard bill clinton say that, bill clinton has not said that before. i could have done better. you could have done better. i think anybody who wasn’t ideologically driven could have done better. what would you have done? sorry? the meaningful steps. what wouldn’t you have done. we need jobs so therefore — and we need exports so therefore the first thing you do is have the nlrb attack the number one exporter in the country on really preposterous grounds, then you in effect start yelling at business and threatening business and then you get on the tv and talk about las vegas and all of a sudden the hotel business dies. i mean, the answer is that we need leadership, not criticism. we need encouragement not discouragement and until that scenario changes i think the united states is quote/unquote, i hate to use this word, in a malaise. is that a function of new laws and legislation or a function of rhetoric? first of all it’s both, okay, in other words, we hope that it’s new laws. the reality is, it isn’t new laws. it’s using the executive branch to legislate by fear or by threat. you don’t need a law. in effect the epa is doing stuffall over the place. the nlra is doing stuff that’s not sanctioned by any law. it’s a political decision and it’s extraordinarily negative to our country and our economy. the journal did you read the lead editorial today how razor thin the obama care vote really was. we know scott brown they had to do reconciliation after he won. gym webb fairly won, al franken sort of harvested the boats to beat norm coleman. those made a difference. evan bayh and jim weber saying we wish we hadn’t taken 20% of the economy with no republican votes and legislated the most unpopular bill in history that’s still unpopular and really poisoned the whole political atmosphere, at the same time you weren’t trying to add jobs. it was almost an impediment to adding jobs. using reconciliation process on prapts the most important piece of legislation in the last 20 years, it is basically contrary to what america was built on, america was built on consensus.america was built on getting people on board, and legislatingaccordingly, not in effect using a mickey mouse process to pass a staggering bill that nobody who voted for it had ever read. is this the way you run a country? i guess chuck, our friend,pushed jim webb on, wish he hasn’t voted for it. no, but even getting him to admit and evan bayh. he said he wouldn’t? he didn’t say he wouldn’t, they both have great regrets about the way it was handled and that’s what got me about, and i think a lot of — the country just listening to bill clinton and nodding. you could see the approval ratings go up and that maybe we’re not such, maybe he couldn’t have done anything and all of a sudden one speech from clinton suddenly we’re not at 8.1% unemployment for 43 months? come on. the reality is that bill clinton was a politician. what we need in this country is a politician. hard as it is to say that. somebody to work with bothsides. in effect who says my objective is this. now who do i have to corral to get from here to there. that’s called leadershipwe know the stimulus bill is just sent down to nancy pelosi and she wrote it. president had no input. dodd-frank same thing, obama care similar. there’s this cadre of people writing the laws of our country without input from at least half the country.what’s the most important thing you think needs to be tackled head on. you think the fiscal cliff is the first issue? there are a multiple of issues that have to be acted on and obviously the fiscal cliff is a very important one. the trouble is the fiscal cliff is probably too easy to solve and kick down the road, and sotherefore i doubt we would be in the fiscal cliff. i’m not sure, to be honest with you, that a fiscal cliff falling off the edge is not exactly what america needs. is this a wake-up call do you k at this point? it’s a pretty severe wake-up call to get. you’re describing a wake-up call to rip van winkle. how many years have we been kicking the khan down the road. that’s a wake-up call for rip van winkle, somebody who has been sleeping for a multitude of years. you’re suggesting play with fire a little bit?i’m suggesting that i’m interested in solving the problem and have you ever solved a problem without playing with fire? have you ever solved a problem without going to the edge? have you ever solved a problem with fear and uncertainty? i certainly have. i do that every day. that’s called taking risks. you assess risk and reward. that’s how our system is predicated on, that’s what built america and we have to look at every option with that in mind. we’ve tried everything under the sun and every solution has kept kicking the can down the road. erskine-bowles, it’sinconceivable that wasn’t endorsed by the president who in fact created the entity in the first place. so people keep playing games but the reality is time is running out. and if kicking the can down the road doesn’t solve the problem, maybe you’ve got to do something else, and maybe the only way you can convince the american people that we really have a problem is to create one. we’re going to talk more about this in a moment. we did have some people who were here earlier this week with somethoughts on simpson-bowles if there’s a way to bring it back.would you be in favor of that in. i think that’s too broad aquestion. there are obvious ents of erskine-bowles that are terrific and basically represent compromise, to say the wholeenchilada is — that’s the problem if you pick it apart bit by bit what you like and what you don’t. go back to our friend billclinton, what was he so good at? getting both sides together. he got his rear end handed to him in the election. what did he do?he responded. what did president obama do? he went further to the left. so are you listening to me, american people, or are youideologically driven, so that you in effect hear nothing. that’s the $64 question or maybe $64 billion question. brilliant. we’re going to talk more about this with sam zell, our guest for the rest of the program.
Zell Blames Obama for Coming Recession
On “Squawk Box,” real estate investor Sam Zell says the U.S. is on the “cusp” of another recession and he blames President Obama for preventing the economy from recovering strongly over the past four years.