“Markets were over-priced coming into 2014,” warns Sam Zell (noting that he does not believe in the Fed’s wealth effect perspective on market-growth helping buying and selling decisions in the real economy), but while he sees a benign outlook for residential real estate, among his biggest concerns are
LIU: Why’d you think that?
LIU: So do you feel that this is pretty healthy then to see this – to see this kind of decline?
ZELL: I don’t think declines are ever healthy, but balance is what keeps us in place. And when we get out of balance like subprime loans or whatever, it’s pretty disastrous. So the market has to keep balancing back and forth as consecutive (ph) currents are relevant. And I think the market in 2014 is a lot more likely to reflect what happened in 2014 than whether or not it was up or down in January.
LIU: But does it make you nervous at all, Sam? I know not much makes you nervous at all, but – but seeing how volatile these markets have been over the last few weeks, does it make you more nervous that Americans are going to look at this and pull back and perhaps they may not be buying as much anymore? They may not be selling as – as many houses or buying as many houses.
ZELL: The market went up 30 percent last year. Did the American people buy everything in sight? No. So what’s the relevance now? I don’t think the market has a dramatic impact on buying and selling decisions unless it’s such a prolonged period like we had in ‘08 and ‘09 that it really dampens everything.
On Inequality, Government Complexity, and Persecution of the 1%:
LIU: Let me ask you about Tom Perkins because you are part of the 1 percent. You are clearly part of the 1 percent. Tom Perkins came out with this – with this letter where he defended the 1 percent and he said, look, we are being persecuted the same as the – as the Nazis were persecuting the Jews. And he was just lambasted and he came on our network and defended it. How did you feel when you read that letter and when you heard his comments?
LIU: Do you think though that there needs to be some help though or that – that there needs to be policy changes or something needs to be done about the growing income – income inequality, the growing gap? Do you think there needs to be something done with that?
ZELL: I think that that is a function of policies and I think that overall the policies that we passed for the last 50 years, whether it be unfunded Social Security or other issues, have all contributed to this disparity. And we need to fix our government. We don’t need 17,000 new pages of federal regulations in the last five years. So I think all of those things contribute to this disparity. And the more complicated our government makes our world, the more the 1 percent can afford to hire somebody to figure it out and the other guy can’t. But if you simplify government, neither one of them require (ph). And therefore the disparity slows down.