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New York
Who could pack the Union League Club at 7:30 am? Billionaire entrepreneur Sam Zell and industry strategist Dr. Peter Linneman, in town yesterday morn for a candid Q&A hosted by ULI New York.
Sam Zell and Dr. Peter Linneman
Sam, left, discussed many topics, with focus on the economy. He says Americans are adjusting on the banking side, as days of free money are over. The recapitalization of the banking system is no different than the early ‘90s, but we have to make sure it works. Banks using deposits for trade business is unconscionable and should not be part of the system, he says—instead, use hedge funds. Fannie and Freddie once didn’t own subprime (meaning “can’t pay it back,” Sam quipped) debt, but became caught in the massive artificial demand. However, multifamily will come out okay.
Peter and Sam with new chapter prez Richard Kessler of Benenson Capital Partners and Meridian Development's Howard Weitzman. Sam continues: TARP was conceptually important into rebuilding confidence, but we need to distinguish between the TARP steps and the follow-ups that wasted money. The biggest inflation risk is four years out, he says, pointing out that it was 13.3% in ’68, yet everyone has heart attacks over 2% today; however, chain supply inflation is significant. Instead of investing in the new, look at debt and non-US emerging markets, he urges. He’s more optimistic on debt than equity, and adds that the beauty of an open system is opportunities outside of real estate.