Sam Zell hit the nail on the head.
In an interview conducted by CNBC, the billionaire real estate mogul claimed that the United States government was losing focus on the primary goal for the economy : growth. Instead, the current administration has been philandering with class inequality and ideas on how to address it, a euphemism for "wealth distribution."
Mr. Zell specifically called out James Bullard, president of the St. Louis Federal Reserve, for essentially acquiescing to low rates of GDP growth. Mr. Zell stated, "I don't see any animal aspirations. I think we need to refocus our efforts on growth." His frustration lies with monetary policy, perhaps the sudden lack of it, because according to his reasoning, the Federal Reserve has a direct impact on "levels of uncertainty" that influence risk tolerance.
As you may have ascertained, I couldn't agree more. The debate between wealth distribution and growth strategies parallels the mounting divergence between revenue and quality of earnings. While many companies, particularly in the retail sector, had disappointing earnings results in the fourth quarter, many other businesses did not. However, the recurring motif amongst publicly traded companies is that revenue acceleration lags earnings. At some point, there's only so much housecleaning that a company can "accomplish" (ie. layoffs) before it is coerced into addressing forward guidance. Likewise, there's only so much taxing of the rich (or people of any income bracket) that can be imposed before the painful realization dawns that increased taxation leads to spending deceleration. And isn't consumption the biggest driver of the U.S. economy?
In some ways, this condition is apropos to the business consultation industry. Fortune 500 companies expend millions of wasteful dollars on high-trumped consultancy firms only to result in receiving a document highlighting problem areas and ways to address them. This almost always results in layoffs. Layoffs are such a cop-out, a solution for the morally and intellectually decrepit, just like "wealth distribution" is a cop-out for any administration wanting to take eyes off the real problems affecting our great nation. The way to solve problems is not to address the problem itself, but rather, solidifying the infrastructure so that the problems become moot.
But what is our government doing? Anything but driving solutions. Instead, they are regressive, constantly looking in the mirror to see what can be tinkered with. Instead of flanking the damn Maginot Line, we are intent on designing weaponry to blow its fortified hull off. This is not only wasteful but exceptionally stupid. It's a strategy of the arrogant, not of the affluent.
Hopefully, more and more people realize the wisdom of Sam Zell and the intricate details behind his argument. Because at some point, his words will ring true, whether we like it or not.
In an interview conducted by CNBC, the billionaire real estate mogul claimed that the United States government was losing focus on the primary goal for the economy : growth. Instead, the current administration has been philandering with class inequality and ideas on how to address it, a euphemism for "wealth distribution."
Mr. Zell specifically called out James Bullard, president of the St. Louis Federal Reserve, for essentially acquiescing to low rates of GDP growth. Mr. Zell stated, "I don't see any animal aspirations. I think we need to refocus our efforts on growth." His frustration lies with monetary policy, perhaps the sudden lack of it, because according to his reasoning, the Federal Reserve has a direct impact on "levels of uncertainty" that influence risk tolerance.
As you may have ascertained, I couldn't agree more. The debate between wealth distribution and growth strategies parallels the mounting divergence between revenue and quality of earnings. While many companies, particularly in the retail sector, had disappointing earnings results in the fourth quarter, many other businesses did not. However, the recurring motif amongst publicly traded companies is that revenue acceleration lags earnings. At some point, there's only so much housecleaning that a company can "accomplish" (ie. layoffs) before it is coerced into addressing forward guidance. Likewise, there's only so much taxing of the rich (or people of any income bracket) that can be imposed before the painful realization dawns that increased taxation leads to spending deceleration. And isn't consumption the biggest driver of the U.S. economy?
In some ways, this condition is apropos to the business consultation industry. Fortune 500 companies expend millions of wasteful dollars on high-trumped consultancy firms only to result in receiving a document highlighting problem areas and ways to address them. This almost always results in layoffs. Layoffs are such a cop-out, a solution for the morally and intellectually decrepit, just like "wealth distribution" is a cop-out for any administration wanting to take eyes off the real problems affecting our great nation. The way to solve problems is not to address the problem itself, but rather, solidifying the infrastructure so that the problems become moot.
But what is our government doing? Anything but driving solutions. Instead, they are regressive, constantly looking in the mirror to see what can be tinkered with. Instead of flanking the damn Maginot Line, we are intent on designing weaponry to blow its fortified hull off. This is not only wasteful but exceptionally stupid. It's a strategy of the arrogant, not of the affluent.
Hopefully, more and more people realize the wisdom of Sam Zell and the intricate details behind his argument. Because at some point, his words will ring true, whether we like it or not.
