High Stakes Game of ‘Fiscal Chicken’
Wilbur Ross, WL Ross & Co. chairman & CEO, discusses the decline in the shipping sector, and weighs in on comments made by Rep. Barney Frank, (D-MA), on sequestration, with Jared Bernstein, Center on Budget and Policy Priorities, and George P. Bush, Maverick PAC national co-chair.
Two videos below:
Transcript:
advanced home management here today. adt. always there.welcome back to squawk box. let’s talk shipping with wilburross. you’re back here. you’re character i think in dynasties of the sea is that right? i don’t know if i’m the character. i’m the subject of the book. i think everybody as a character unto themselves. there are some genuine characters in the book.lori ann’s book, but you think that we’re at a bit of a bottom in the shipping business. i think the bankruptcy filing yesterday of osg will go down as the poster boy marking the emergence of the bottom. i don’t think we’re quite there yet but the outcome of osg i think will lead us to the bottom. you have an interest, we needto be clear. they chart your ships. eight of our ships. you’re not affected because you have deals with them and they’re current on the charters. they’re current on the charters, they prepay us every month so we have our november payments. we believe they want to keep our vessels, there may be a conversation about rates but we don’t see the vessels just coming back. do they get tied up in a bankruptcy proceeding? not if they keep making their payments. right, okay. are we going to break? no, back to our conversation about the fiscal cliff we’re going to solve today, back to our conversation about the fiscal cliff dominating conversations from wall street to washington. i sat down, we’ll go back to barney frank yesterday and we talked about it. take a listen to what he had to say. sequestration is a terrible idea and that could be very disruptive and if we go in tosequestration, yeah, i think that’s awful. if the taxes run up on everybody for a month or two, it would be a temporary bump, it would be slowing down the expansion which i think is coming but you could undo it. i want to get everybody at the table to react. we have george p. bush, jared bernstein and wilbur ross.if we go off two or three weeks like he says does that makesense to you? the encouraging positive news is we can retroactively apply an entitlement reform package applybeginning january 1 where the day after the budget control acttakes place we can mitigate the effect of falling off the cliff or the slope or however we want to characterize it, but as we were discussing before, that’s not the ultimate ideal situation. who has more leverage after january 1st? a lot of the polling dataindicates republicans would be blamed but i think greatleadership puts aside polling data and realizes we have divided government, that we need to get together, find consensus and close deals. i think i know how you’d answer that question. who do you think has more leverage? i don’t think anybody has theleverage, because it will be political suicide for everyone i think to go off the cliff. what happens to the market on january 2nd? it goes down. how much? there’s still the perception we’ll get a deal in two or three weeks. no one in the administration will know any more about the issues two weeks after january 1st than they did two weeks before. is there any common sense you can offer these guys in washington about how to solve this just from a business standpoint, if this were a problem you were confronted with. yeah, i think they’re articulating it wrong.nobody is talking about spending cuts. we’re talking about slowing the rate of spending increase. nobody has spending cuts on the table. it’s the rate of increase, even paul ryan’s was going to grow spending at 3% or so a year. what would you cut, wilbur? hmm? what would you not slow but cut? you have to deal with medical, for example, talking about the reform in health care is a joke if you don’t deal with medical malpractice.there’s been no talk about that at all on either side of the aisle.that’s a joke that leads to overtesting, too expensive insurance policies. malpractice is not inherent in providing universal health care. couple of points. first of all, wilbur raised the bar by the way, if you’re talk being not just slowing the rate of growth of spending but cutting spending that makes the solution a lot harder. i’m not saying you’re wrong. i happen to disagree with you. i did say we should c actual spending. i said that the verbiage about it is wrong because we’re not cutting spend willing. we’readjusting the rate of growth. we haven’t talked about the fact that everybody up there in washington agrees with 98% of the tax policy that should reset which is of course the middle class, and the president did make a very strong argument for at least getting that off the table. i think that would help because i don’t think that markets start reacting badly january 2nd. i think markets start reacting badly well before that.they’ve already started. but the trade-off the president proposed is not a trade-off to say give me what i want, which is the middle class relief, and i’ll give you a framework for negotiations. that’s a sucker’s punch. we have 35 minutes to come up with a solution. you said a sucker’s game? yes. becky ruined it.
Private Equity Titan Rises Above Fiscal Cliff
“I think part of the market weakness you are seeing is lots of investors saying, this may be my last chance to sell things at the lower capital gains rate,’ said Wilbur Ross, WL Ross & Co. chairman & CEO, explaining how he plans to navigate through choppy market waters.
