The CEO and chairman of WL Ross & Co., Wilbur L. Ross Jr., says the natural gas industry is headed for "trauma' and that the trade deals announced on President Obama's India trip were a lot of hype.
Mr. Ross spoke at lunch today as part of the Hudson Institute's New York briefing program.
Mr. Ross said he's done buying banks in America with FDIC assistance, because strategic buyers are now paying higher prices to acquire those banks. He said he is looking in Ireland, the United Kingdom, and Germany, seeking to do FDIC-type deals to take over financial institutions there.
He said he's also interested in investing in health care, which he said will be reshaped as ObamaCare is implemented.
And he said that natural gas prices for "shale gas" are so low that in some cases it costs $4 to get gas out that can then be sold for only $4, suggesting there might be a way to take advantage of what he said would be "trauma" in that sector.
Mr. Ross said some of the trade deals announced by President Obama in India were being oversold. "The airplanes that he announced as a new order for Boeing came from an airline we control and were announced in June," he said. The turbines that Mr. Obama announced GE had sold had also already been announced as sold, back in August.
He said this suggested the possibility that the Obama administration's attempt to improve relations with the business community might be simply "a p.r. effort." He said that if the Obama administration wanted to demonstrate seriousness on this front, it would either withdraw Elizabeth Warren from her job starting the new Consumer Financial Protection Agency or subject her to a full Senate confirmation. He called it "singularly inappropriate" to have her working in a backdoor fashion.
Mr. Ross said of the Federal Reserve's "QE2": "I don't think it's going to accomplish an awful lot by way of a near term stimulus." He said it might lower mortgage rates and thus help with refinancings that would put some money into consumers' pockets, and he said it might weaken the dollar and help exports. But he listed downsides, too.
He said that the Fed's action may hurt the cause of fiscal reform in Washington. "Through the mechanism of the Federal Reserve we are monetizing the federal deficit," he said. "They don't have to worry about 'Will somebody buy the bonds?' because the Federal Reserve will buy the bonds."
He said "there's a very serious danger" that countries such as Thailand or South Korea will respond to the Fed action by imposing "some kind of capital controls" that would "start restricting the velocity of global money supply."
"I'm very worried about the inadvertent effects of what we are doing with QE2," he said.
He said he had discussed the matter in meetings with former Fed governors and they had told him that Chairman Ben Bernanke was "worried about his place in the history books" and "kind of feels back into a corner."
"It's scary if true," Mr. Ross said.
Mr. Ross also expressed concern about what he called "the demise of middle class America." He said consumers lost $11 trillion of net worth in the financial crisis, and that indebtedness is only down by $1 trillion, meaning that the American public is "more highly leveraged now than before."
He said there are cars in Florida now sporting bumper stickers that say, "Honk if I'm paying your mortgage."
"Funny, but a little bit scary," he remarked.