Wilbur Ross: Ups From The Market’s Downs?

Wilbur Ross. Via.

Yesterday Wilbur Ross, chairman and CEO of WL Ross & Co. and chairman of Japan Society, sat down with Council on Foreign Relations’ Benn Steil to talk Greed vs. Fear: Making Sense of the Market Crash (watch the full video). The discussion used the August 2011 crash as a springboard to look at the economic situations of the U.S., Europe, China, and Japan, and how they can improve and fix their respective problems.

Reporting from the event, The Wall Street Journal noted that "Ross has to squint to see the bright side":

Wilbur Ross isn’t optimistic. He says he’s not totally pessimistic, but the financier is short on happy thoughts.

Over the course of an hour-long talk Wednesday afternoon at the Japan Society in New York, Mr. Ross voiced just about only one view that was in the not-totally-depressing camp. Stock markets, he says, “have priced in a very bearish scenario. Unless things get truly bad, the worst is probably over for the markets,” he said. 

While WSJ goes in-depth about the more pessimistic points, there were several observations and key takeaways for overall improvement from the discussion:

● The U.S. has gone two years with practically no budget. The lack of Democrat and Republican consensus on what needs to be cut is due to both sides aiming at each other’s "sacred cows". The resulting political inertia is the U.S. economy’s worst enemy. It prevents strong leadership and a lack of bold responses to various crises. The preoccupation with presidential and congressional elections, along with the Tea Party phenomenon, further polarizes the political structure doing little to help the economy.

● Greece has been at the brink of default for some time. The European Union never had preparations if a member leaves voluntarily or is forced to leave, which belies that a single currency means a cohesive political and fiscal union. European nations need to stop applying small fixes to crises and instead apply big changes to the point of overkill as soon as they come up.

● China is doing fairly well for itself despite a major housing shortage. The nation’s recent high economic growth means housing demand can be supplied without too much worry of a crash. Ross said that because of the economic success China is having, he would rather bet on their banks than the European ones.

● The U.S. and Japan both have cash rich economies, but they are not as liquid as they could be. True liquidity should be attained to help stimulate their respective economies.

● Japan, while the response to the recent earthquake was incredibly quick, needs to continue focusing on rebuilding the Tohoku region in order to help revitalize the economy. The cultural avoidance of change is also not helping progress, leading to further depression and low growth. Due to the labor shortage, Japan needs to incorporate more women and immigrants into the workforce.

● It would be most logical for Japanese companies to make more foreign investments especially while the yen is so strong. However, there is seemingly no push for that move, unlike in China where natural resources are in small numbers so they have dipped into Africa, South America, and even the U.S.

● Finally, there is a self-correcting mechanism in the economy that will only activate when governments decide to be more decisive with their actions, be more willing to invest, and generally be much bolder.

--Sean Tomizawa

Japan's Shifting Generations, The World's Shifting Wealth

Reuters: Japan expects over 1/4 of citizenry to be 65+ by 2015. Via and via.

From Japan's lost generation to their estimated 41,000 centenarians, age disparity profoundly affects Japanese society, culture and economy.

Traditionally, Japanese people who graduated from university would generally be hired by a company and stay there until they had to retire. Stability has always taken precedent over upward mobility. With current changing global economic and social trends, the individual is beginning to take more responsibility for his/her financial future by resorting to new online brokerage accounts and non-traditional investment vehicles. This is coupled with the rapid retirement of the baby boomer generation who are in need of asset management services to help them for their remaining years.

The old vs. new debate is as relevant as ever, especially for financial professionals and the general investing population when considering Japan, one of the world’s largest economies and consumer societies. In Japan Society's Wealth Managers Grapple with Japan's Shifting Generations, experts discuss major shifts in Japanese wealth management, how participants around the world are affected, and examine a host of financial planning implications for current and future Japanese retirees.

The panel includes  Monex Group President and CEO Oki Matsumoto; Alicia Ogawa from Columbia University's  School of International and Public Affairs; and Walter Altherr, executive director of equity research at Mizuho Securities USA. Moderated by Reuters' Anchor Fred Katayama, the discussion takes place Wednesday, November 10.

T.D.

'Turnaround King' Wilbur Ross Discusses The Importance Of Business In Japan

Wilbur Ross talks freshness of Japan with The Nikkei.

"Generally speaking, westerners do not recognize the opportunities in investing in Japan, and they overestimate the risks. I hope to correct these misunderstandings through the activities of Japan Society." --Wilbur Ross

As we announced last month, Japan Society's new Chairman Wilbur L. Ross, Jr., CEO of WL Ross & Co. LLC, took the helm on June 9. He recently spoke with The Nikkei, Japan's most prominent business newspaper, about the importance of business in Japan, and common misconceptions investors have about East Asia. The article appears below in translation.


Education, Science, and Finance: The Strengths of Japan
“Japan’s Aging Society Hinders Growth” – Wilbur Ross, The King of Bankruptcy

American investor Wilbur L. Ross (72 years old), who has revived many distressed companies, was dubbed the “King of Turnaround” by Fortune magazine. Based on his 20-year investment history there, he sees a positive future in Japan. What does this influential investor see in Japan?

Nikkei: Rapid growth in Asia’s emerging markets has led to a pervasive loss of self-confidence in Japan.

Wilbur Ross: Because of its large population, it’s only natural that the scale of China’s economy is large.
Being number 2 or 3 is a matter of pride. The United States will eventually lose its number 1 status. Rather, if I were Japanese, I would ask myself, “Am I making full use of my abilities and resources?”

Japan has been doing a great job to maintain a trade surplus with China. There are only a few countries in the world able to do this. Japanese companies have built first-rate production bases in China, and in India, Suzuki holds the largest share of the automobile market. Japan has been contributing to the development of the emerging countries more than America. Although Japan’s economic growth rate is low, the future for Japanese companies is bright.