Mort Zuckerman, co-founder and chairman of Boston Properties, talks to Chrystia Freeland, US managing editor, and the economic crisis, the credit crunch and what government intervention should look like.
At about 3:20:
Zuckerman: …some how or another the federal govt is going to have to join in some way with guaranteeing bank loans. Not the full amount but let’s just say that commercial banks would make loans for 10 or 15 or 20…
Freeland: Guarantee new loans?
Z: New loans, not old loans. Because we must find a way to start credit flowing in the economy again or else we stand a chance of a real bust. So some how or another we have to get the government involved.
F: Wouldn’t that impose a risk of moral hazard? Isn’t that sort of Fanny Freddization all over again…
Z: Moral hazard, ideology, these are the things we can no longer think about – when you’re talking about saving the system. I wouldn’t care if we save the system by violating concerns about moral hazard or ideology.
F: If the govt has to intervene even more deeply in the financial system how much extra money do you think it’s going to end up spending on that?
Z: Well I saw where Larry Summers estimated that it would take somewhere between a trillion and a half dollars and three trillion dollars just in a sense to refloat the financial system. I think that’s a very good range. If anything I would come out near the top end of the range.
F: Of government money?
Z: Or government credit.
F: And do you think the American people, the American political system, is prepared to sign off on that amount of money?
Z: I think when they see what the alternatives are I think they’ll be prepared to do that.
At about 6:45:
Z: …because without that confidence nothing will work. No matter what this is a consumer led economy. 72% of our economy is based on consumption. If the consumer holds back and pulls back – which he or she can do – people can live very well with alot of what they already have other than food and drink and fuel.
F: No one needs to buy a new a car this year, no one needs to buy a new TV set.
Z: Right. A lot of people can live – it’s the TV programming that needs to be changed not the TV set. And I’ll tell ya, this is going to be an extraordinary year in American public life no matter who is in the Congress and who is in the White House.
F: You’re also a publisher. How is the print publishing business doing?
Z: Well the print publishing business is an oxymoron. It is no longer a business. It is an advertising driven business and the advertisers have driven elsewhere.
Zuckerman goes on to claim that almost every major newspaper is losing money, but that he didn’t get into the business to make money, he’s just addicted to journalism.
At about 8:05:
F: Has the Madoff affair had a particular impact on the American jewish community?
Z: Well I suppose on some level it is, the fact is that what he did was completely against jewish values, against not only the way jews contribute to a community in human terms but in financial terms – he robbed alot of charities of the funds which they are contributing to…
F: Specifically actually jewish charities that he was involved in.
Z: Yeah, alot of jewish charities, yes. My charity isn’t specifically a jewish charity – I mean I support cancer research, and scholarships, and things like that, but having said that, but you know as I said Ponzi, last time I checked, was an Italian and he was the person who gave the name to this kind of thing and it doesn’t mean that all Italians are involved in this. So the fact that he happens to be jewish, he’s also a sociopath, and that was the dominant feature of this man, who was willing to damage all sorts of people almost without remorse.
Freeland would seem to disagree. She’s concerned about the particular impact on jews, and specifically actually jewish charities.
It’s easy to imagine Madoff, at least up until December 2008, was thinking about his private pyramid scheme along the same lines Zuckerman is still thinking about the larger consumer-based economy: moral hazard, ideology, these are the things we can no longer think about – when you’re talking about saving the system.
Jewish charities. Keep people spending. Save the system. This is how jews really contribute to a community in financial terms.
Ponzi, last time I checked, was a piker compared to Madoff. From here on Madoff should be the person who gives the name to this kind of thing. As Zuckerman should readily agree, nobody will think that means all jews are involved.