The Big Winner

June 30th, 2008 by admin

I found this interesting interview with Mort Zuckerman from a few months ago:

Here are the main points from the billionaire publisher and real estate investor:
I think we’re in the 4th inning of a nine inning ball game. We’re nowhere near the bottom of this problem and nobody knows exactly where the bottom is but we’re going to have a very serious recession that’s going to go on for a couple years.

I think the fundamental strategic flaw in our economy these days is housing prices. This is two thirds of the balance sheet of the average American family. Housing prices have been going down at an extraordinary rate. They’re going to continue to go down because we had a bubble in housing that was unprecedented, a bubble that was once in a century. And we will see, I think, continued decline in the value of homes. It’s going to affect the sixty nine percent of American families who have homes. Right now you have nine million mortgages that are greater than the value of the homes and it’s going to go up to fifteen million, which means there will be negative equity or no equity in those homes. Nobody knows what people are going to do when they find out their mortgages are more valuable than their homes and we can have a major drop in consumer spending as people feel the net worth they once had in their homes has gone down dramatically.

Keep in mind that billionaires can make wrong bets. Still, it’s always interesting to hear the thoughts of someone who made it big like Zuckerman.