Wilbur Ross was on CNBC recently. He says that Italy may be less stable politically than Greece, adding he’s impressed with new Greek reforms. He also said that Italy has a choice between “two clowns”.
Video and computer generated transcript below:
wilbur ross, chairman and ceo of w.l. ross and company. good morning to everyone. hey, wilbur, we sort of assumed that we were seeing some move out of fixed income, and that was responsible for the new highs in the equities or the new five-year highs. but then we hear from other people that we really haven’t begun to see that, phil gross and others said that’s not what happened. i hope it’s not. because i hope we have that to look forward to as the rally picks up steam. well, i think it’s a little bit of both. i think a lot of the corporate news has been coming through okay.stocks aren’t all that expensive. people are feeling even withitaly that perhaps the european thing isradually getting safe and the market clearly is not paying allot of attention tosequestration. so i don’t see great huge clouds over it near-term. what do you make of — you always have some insights,wilbur. what do you make of the whole saga of this sequestration? once again it’s hard to talk about it without talking about getting down into the mud of partisan politics. but, kind of fun to watch, isn’t it? watching the — these two sides not sure how it’s going to be taken by the public, and trying to stake out the high ground. well, what’s sad is that they seem to be more in to trying to figure out who to get blamed than they do trying to figure out how to make it have the least effect on the economy. i was astonished to hear the go-around yesterday where the republicans were prepared to give the president flexibility in how to implement this, and he, in effect, said we don’t want the flexibility. i want it to hurt. right. it’s because if there’s no revenue — it would be — the journal attributes it to thatit would be saying yeah, we can cut 2.3% and i’m not even goingto admit we can cut 2.3%. i want to show people that we can cut 2.3% the world won’t end. i think we should pass a new law that requires us to do with iowa euphemisms. i think we should call taxes taxes. i think we should call them not revenues but taxes. i think we shouldn’t call cuts things that still lead to higher budget than before. i think we need a grammatical –yeah, you’re right. because they’re not cuts. you’re right. it’s slowing growth in spending. let me ask rebecca, i mean, doyou, have you done anything with your — you — on how theeconomy fares if given sequestration? well, i mean, i think themarket right now is assuming that at some point later this year we’re going to get some revamp of it. either it will be reduced orpushed back or reshaped somehow so it will hurt in a differentway, maybe less. i do worry a little bit about that because i don’t know that that’s a given. i’m certainly not being complacent about sequestration. at the same time it does look like there’s enough momentum behind housing that the increase to gdp this year from housing, maybe half a percentage point, can offset the hit from sequestration. maybe not exactly, so, at themargin, where does that leave us? subtrend growth and a fed that’s still very nervous and easy. do you look at 2.3% ofgovernment spending as something that the economy needs to not take a hit? i don’t think it’s going to be that big a deal. it is clearly a headwind so the expectation — why isn’t it a tailwind — if we have a trillion dollar deficit, we’re borrowing almost out of it to subsidize, why isn’t it a positive that we can cut — you reduce government spending you reduce gdp to some degree. just math. but spending is not worth a dollar of private spending,isn’t it — having a federal approach than a sequestration. trying to get to that but he won’t take it. both sides are arguing aboutit. so i think the reality is underlying strength of the economy is actually getting better. so the first half is going to be a struggle because we have the tailwind already, the headwind already, taxes we’ve already had, and sequestration. but i think the progress in the housing market, employment is steady, i think you’ll start to see more traction. okay, let me ask you. you said it’s the meat ax that you don’t like. so if you could do it in asurgical way with waste and things that needed to be donewould you do it just with cuts or would you demand, as groverlikes to say, would you demand revenue? just look at it from aresearch point of view. maybe say about two-thirds from cuts, and a third from — for even the sequester? we just raised taxes.the sequester is already old news i would suggest. now the next question is can we have some kind of sensible policy that really is a grand bargain? that both sides can live with that reduced the government in a way that makes sense, thatreduced entitlements in a way that makes sense, and in somcases, taxes are raised again. i think we’re getting less likely –we’re not cutting on this, i don’t think anybody is counting on it. it was a pipe dream, wilbur to think simpson and bowles would ever happen but the way i recall we were going to trade in these loophole getting rid of the deductions and all these — these things that we’re talking about now, we were going to do that as we tried to lower marginal rates. now we’ve already raisedmarginal rates and now we’re bringing them in. that’s why people look at it and can’t really understand how that’s, you know, how that’s part of simpson-bowles or part of keeping your side of the bargain on what we’re going to do to try and get things in order. we raised the marginal rates and now we’re getting rid of all the things we were going to trade to lower imagine nal rates. i can see why we’re getting further and further apart and that’s where ashley what’s her face wrote this thing in the new york times. boehner sooner or later is just going to, you know, and he’s going to have support from the rank and file to say we’re going to stand pat on this and the rest of us are going to suffer. no? wilbur? well, i don’t think we’re going to suffer all that much. and i think there’s a very easy, private sector solution to the little hit that we’re taking from the cuts. and that would be there are 16 applications pending, natural gas export terminals that the president would let those go through, let keystone gothrough, it had plenty of capital spending, and plenty of job growth that would more than offset this whole business aboutthe sequestration. wouldn’t take one penny of federal revenue, federal contribution. and, in fact, it would produce some taxes.so, i think there’s a very simple private sector solution to getting the economy moving more rapidly. i don’t see that — i think that’s a great point. i mean, it takes — tells us that we need to look away from just the politics and keep looking at the big picture. if china had some unsettling data last night but if china can do better, the second biggest economy in the world. japan looks like momentum. europe, we’ll see what goes on with italy. the rest of the world is at least less bad. it’s stabilizing.gives the u.s. a lot more cushion to deal with some fiscaltightening and get through this. this is a gdp revision we got inthe u.s. this week one of the biggest lifts to it was trade, right?and we need a weak dollar and we need the rest of the world doing less badly. better is too strong a word. and that can