Tuesday, October 2, 2012

CNBC: 'We're Heading for Recession,' Says Sam Zell

For those of you in countries which count on the senseless consumer spending in the US (China and Japan, for example), things may not happen to your liking.

From CNBC via Yahoo Finance (10/2/2012; emphasis is mine):

A compounding lack of confidence in the future has kept American companies from investing in their businesses and is leading the country back into recession, real estate mogul Sam Zell told CNBC.

The CEO of Equity Group Investments, which holds multiple publicly traded companies primarily in the real estate space, said a lack of leadership in Washington is keeping the $2 trillion or so of cash on company balance sheets on the sidelines.

That's happening even as the Federal Reserve continues pumping liquidity, which Zell said is being used only to prop up the stock market.

"Nobody wants to make commitments beyond tomorrow," Zell said during a"Squawk Box" interview. "One of these (recession) triggers is when enterprise projects start getting delayed. We're heading for a recession and that's exactly what you're looking at now. You're looking at capital expenditures across the board being deferred for a reason: There's no confidence."

The U.S. economy remains mired in high unemployment, at 8.1 percent, and low growth, in which gross domestic product gained just 1.3 percent in the second quarter.

While not mentioning President Barack Obama by name, Zell has been a critic of the administration and said it is "using the executive branch to legislate by fiat or by threat."

Zell has donated $70,000 to the campaign of Republican challenger Mitt Romney through the candidate's political action committee.

"We need leadership, not criticism. We need encouragement, not discouragement," he said. "Until that scenario changes, I think the United States is, quote-unquote and I hate to use this word, in a malaise."

Yet Zell said he does not envy whoever wins the race because of the myriad challenges the country faces.

"Whichever guy wins is going to have to do an enormous amount of stuff very immediately," he said. "It's very hard and, based on all the stuff we're looking at, very hard not to assume that we're on the cusp of going back into recession."

In case of Europe's euro zone, recession is already happening. The central bank of Australia (Reserve Bank of Australia) cut the key rate on Tuesday by 0.25% to 3.25% in order to aid the economy which is slowing in tandem with that of China. The US is doing fine so far, cooking the stats.

Unlike in the fall of 2008 when there was Lehman Brothers to blame for the global recession that ensued with the global stock market crash, who are they going to blame this time?

Central banks in Europe, the US, the UK, and Japan will simply double and triple their reserves by lifting every offer across the financial markets, saying "We just need to do more, and things will improve!"

(Where's the spaceship to any planet where there is no central banker and central government?)


Anonymous said...

They're a tad behind on this.

arevamirpal::laprimavera said...

Yeah I know. From what I see, many parts of the country has never gotten out of the Lehman recession.

Anonymous said...

I wonder if they'll ever admit that their stupid systems don't work and try looking for better alternatives.

Anonymous said...

@1:19 Banks are fewer and therefore stronger, ECB lends to banks at 1% and banks lend to states at 6%, income divide is getting larger everywhere, pensions are vanishing into thin air (sometimes openly stolen in order to save companies like GM), taxpayers cover for the losses caused by Tepco cost saving measures, food in Japan will be 5% more expensive in order to finance more public works -- looks like everything is working fine for the likes of Keidanren, where do you see the problem (sarcasm)?

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