Amid report banks could crumble, LA Times owner says economy strong
Blames Clinton, Obama for describing situation as bad
The billionaire investor who recently purchased Tribune Co., the parent firm of the Los Angeles Times and the Chicago Tribune, described the economy as solid for farmers, credit companies and CEOs with strong balance sheets in a CNBC interview Tuesday -- right on the heels of several falling economic indicators.
Sam Zell, the equity fund titan who owns Tribune, ironically has struggled to maintain control over his own paper. The LA Times fired its top editor in January after he rejected a Tribune order to cut $4 million from the newsroom, one year after his predecessor was fired for the same thing.
Zell also blamed Democratic presidential candidates Hillary Clinton and Barack Obama for "much of the current economic troubles."
The US economy will avoid recession as the housing market begins to recover this spring, according to billionaire investor Sam Zell.
"Obviously what we have going on is an attempt to create a self-fulfilling prophecy," Zell declared. "We have two Democratic candidates who are vying with each other to describe the economic situation worse.
"The reality is that if you live on Wall Street and you're in the credit markets the world couldn't be worse. If you're a farmer and you're getting $25 for your wheat, you're having a great time. If you're a CEO and you've got a balance sheet that's bullet-proof, you're in a great position. This whole thing is way out of control, way out of hand."
His assessment, however, doesn't match up with those on the financial wires. Late yesterday afternoon, an article asserting that the FDIC -- which insures Americans' bank accounts to $100,000 -- is anticipating major bank failures.
"A record-high $31.3 billion set aside by banks for loan losses, record trading losses and goodwill expenses dragged down fourth-quarter net incomes of insured banks to a 16-year low, according to the Federal Deposit Insurance Corp.'s quarterly banking profile released Tuesday," TheStreet said. "The cumulative increase to loan-loss provisions was the largest increase in 20 years."
Zell took Tribune private late last year in an $8.2 billion buyout. He also owns the Chicago Cubs.
This video is from CNBC's Squawkbox, broadcast February 26, 2008.
Watch the entire interview here.