Rogers: Yeah. But remember that America had such a magnificent and gigantic position of dominance that deterioration will take time. You know, you don’t just change that in a decade or two. It takes a lot of hard work by a lot of incompetent people to change the situation. The U.K. situation I just explained… that decline was over 40 or 50 years, but they had so much money they could have continued to spiral downward for a long time.
Even Zimbabwe, you know, took 10 or 15 years to really get going into its collapse, but Robert Mugabe came into power in 1980 and, as recently as 1995, things still looked good for Zimbabwe. But now, of course, it’s a major disaster.
That’s one of the advantages of Singapore. The place has an astonishing amount of wealth and only four million people. So even if it started squandering it in 2008, which they may be, it’s going to take them forever to do so.
http://jutiagroup.com/2008/08/25/jim-rogers-the-legendary-investor-speaks-about-the-credit-crisis/
Jim Rogers: The Legendary Investor Speaks About The Credit Crisis
August 25th, 2008
Whenever a visionary like Jim Rogers speaks, the elite investors of the world listen. And for good reason: His insights have made investors a fortune. Our friend and colleague Keith Fitz-Gerald recently sat down with Jim Rogers for another of his exclusive interviews. Rogers, no doubt, has been very public about his criticism for U.S. government and corporate fiscal policy. Here he digs into the duration of the credit crisis - something on the minds of many investors today…
Earlier this week, the transcript of this interview was released for the first time to Money Morning readers. And he’s agreed to share it with us here at Investment U…
Global Investing Guru Jim Rogers on the Financial Crisis
The U.S. financial crisis has cut so deep - and the government has taken on so much debt in misguided attempts to bail out such companies as Fannie Mae and Freddie Mac - that even larger financial shocks are still to come, global investing guru Jim Rogers said in an exclusive interview with Money Morning.
Indeed, the U.S. financial debacle is now so ingrained - and a so-called “Super Crash” so likely - that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away - if it ever is, said Rogers.
The end of this credit crisis “is a long way away,” Rogers said. “In fact, it may not be in our lifetimes.” During a 40-minute interview at a wealth-management conference in a West Coast Canadian city last month, Rogers also said that:
-U.S. Federal Reserve Chairman Ben S. Bernanke should “resign” for the bailout deals he’s handed out as he’s tried to battle this credit crisis.
-That the U.S. national debt - the roughly $5 trillion held by the public- essentially doubled in the course of a single weekend because of the Fed-led credit crisis bailout deals.
-That U.S. consumers and investors can expect much-higher interest rates - noting that if the Fed doesn’t raise borrowing costs, market forces will make that happen.
-And that the average American has no idea just how bad this financial crisis is going to get.
“The next shock is going to be bigger and bigger, still,” Rogers said. “The shocks keep getting bigger because we keep propping things up … [and] bailing everyone out.”
Jim Rogers, George Soros & The Quantum Fund
Jim Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers “retired” in 1980 that the investing masses got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as “Investment Biker” and the recently released “A Bull in China.” And he made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent, and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Rogers’ candor has made him a popular figure with individual investors, meaning his pronouncements are always closely watched.
Jim Rogers: The Exclusive Interview
Here are some of the highlights from the exclusive interview we had with the author and investor, who now makes his home in Singapore:
Keith Fitz-Gerald: Looks like the financial train wreck we talked about earlier this year is happening.
Jim Rogers: There was a train wreck, yes. Two or three - more than one, as you know. [U.S. Federal Reserve Chairman Ben S.] Bernanke and his boys both came to the rescue. Which is going to cover things up for a while. And then I don’t know how long the rally will last and then we’ll be off to the races again. Whether the rally lasts six days or six weeks, I don’t know. I wish I did know that sort of thing, but I never do.
Keith Fitz-Gerald: What would Chairman Bernanke have to do to “get it right?”
Rogers: Resign.
Keith Fitz-Gerald: Is there anything else that you think he could do that would be correct other than let these things fail?
Rogers: Well, at this stage, it doesn’t seem like he can do it. He could raise interest rates - which he should do, anyway. Somebody should. The market’s going to do it whether he does it or not, eventually.
The problem is that he’s got all that garbage on his balance sheet now. He has $400 billion of questionable assets owing to the feds on his balance sheet. I mean, he could try to reverse that. He could raise interest rates. Yeah, that’s what he could do. That would help. It would cause a shock to the system, but if we don’t have the shock now, the shock’s going to be much worse later on. Every shock, so far, has been worse than the last shock. Bear Stearns [now part of JP Morgan Chase & Co. (NYSE: JPM)] was one thing and then it’s Fannie Mae (NYSE: FNM), you know, and now Freddie Mac (NYSE: FRE).
The next shock’s going to be even bigger still. So the shocks keep getting bigger because we keep propping things up and this has been going on at least since Long-Term Capital Management. They’ve been bailing everyone out and [former Fed Chairman Alan] Greenspan took interest rates down and then he took them down again after the “dot-com bubble” shock, so I guess Bernanke could try to start reversing some of this stuff.
But he has to not just reverse it - he’d have to increase interest rates a lot to make up for it and that’s not going to solve the problem, either, because the basic problems are that America’s got a horrible tax system, it’s got litigation right, left and center, it’s got horrible education system, you know, and it’s got many, many, many [other] problems that are going to take a while to resolve. If he did at least turn things around - turn some of these policies around - we would have a sharp drop, but at least it would clean out some of the excesses and the system could turn around and start doing better.
But this is academic - he’s not going to do it. But again, the best thing for him would be to abolish the Federal Reserve and resign. That’ll be the best solution. Is he going to do that? No, of course not. He still thinks he knows what he’s doing.
Keith Fitz-Gerald: Earlier this year, when we talked in Singapore, you made the observation that the average American still doesn’t know anything’s wrong - that anything’s happening. Is that still the case?
Rogers: Yes.
Keith Fitz-Gerald: What would you tell the “Average Joe” in no-nonsense terms?
Rogers: I would say that for the last 200 years, America’s elected politicians and scoundrels have built up $5 trillion in debt. In the last few weekends, some un-elected officials added another $5 trillion to America’s national debt.
Suddenly we’re on the hook for another $5 trillion. There have been attempts to explain this to the public, about what’s happening with the debt, and with the fact that America’s situation is deteriorating in the world.
I don’t know why it doesn’t sink in. People have other things on their minds, or don’t want to be bothered. Too complicated, or whatever.
I’m sure when the [British Empire] declined there were many people who rang the bell and said: “Guys, we’re making too many mistakes here in the U.K.” And nobody listened until it was too late.
When Spain was in decline, when Rome was in decline, I’m sure there were people who noticed that things were going wrong.
[Msg Truncated...]
Even Zimbabwe, you know, took 10 or 15 years to really get going into its collapse, but Robert Mugabe came into power in 1980 and, as recently as 1995, things still looked good for Zimbabwe. But now, of course, it’s a major disaster.
That’s one of the advantages of Singapore. The place has an astonishing amount of wealth and only four million people. So even if it started squandering it in 2008, which they may be, it’s going to take them forever to do so.
http://jutiagroup.com/2008/08/25/jim-rogers-the-legendary-investor-speaks-about-the-credit-crisis/
Jim Rogers: The Legendary Investor Speaks About The Credit Crisis
August 25th, 2008
Whenever a visionary like Jim Rogers speaks, the elite investors of the world listen. And for good reason: His insights have made investors a fortune. Our friend and colleague Keith Fitz-Gerald recently sat down with Jim Rogers for another of his exclusive interviews. Rogers, no doubt, has been very public about his criticism for U.S. government and corporate fiscal policy. Here he digs into the duration of the credit crisis - something on the minds of many investors today…
Earlier this week, the transcript of this interview was released for the first time to Money Morning readers. And he’s agreed to share it with us here at Investment U…
Global Investing Guru Jim Rogers on the Financial Crisis
The U.S. financial crisis has cut so deep - and the government has taken on so much debt in misguided attempts to bail out such companies as Fannie Mae and Freddie Mac - that even larger financial shocks are still to come, global investing guru Jim Rogers said in an exclusive interview with Money Morning.
Indeed, the U.S. financial debacle is now so ingrained - and a so-called “Super Crash” so likely - that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away - if it ever is, said Rogers.
The end of this credit crisis “is a long way away,” Rogers said. “In fact, it may not be in our lifetimes.” During a 40-minute interview at a wealth-management conference in a West Coast Canadian city last month, Rogers also said that:
-U.S. Federal Reserve Chairman Ben S. Bernanke should “resign” for the bailout deals he’s handed out as he’s tried to battle this credit crisis.
-That the U.S. national debt - the roughly $5 trillion held by the public- essentially doubled in the course of a single weekend because of the Fed-led credit crisis bailout deals.
-That U.S. consumers and investors can expect much-higher interest rates - noting that if the Fed doesn’t raise borrowing costs, market forces will make that happen.
-And that the average American has no idea just how bad this financial crisis is going to get.
“The next shock is going to be bigger and bigger, still,” Rogers said. “The shocks keep getting bigger because we keep propping things up … [and] bailing everyone out.”
Jim Rogers, George Soros & The Quantum Fund
Jim Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers “retired” in 1980 that the investing masses got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as “Investment Biker” and the recently released “A Bull in China.” And he made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent, and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Rogers’ candor has made him a popular figure with individual investors, meaning his pronouncements are always closely watched.
Jim Rogers: The Exclusive Interview
Here are some of the highlights from the exclusive interview we had with the author and investor, who now makes his home in Singapore:
Keith Fitz-Gerald: Looks like the financial train wreck we talked about earlier this year is happening.
Jim Rogers: There was a train wreck, yes. Two or three - more than one, as you know. [U.S. Federal Reserve Chairman Ben S.] Bernanke and his boys both came to the rescue. Which is going to cover things up for a while. And then I don’t know how long the rally will last and then we’ll be off to the races again. Whether the rally lasts six days or six weeks, I don’t know. I wish I did know that sort of thing, but I never do.
Keith Fitz-Gerald: What would Chairman Bernanke have to do to “get it right?”
Rogers: Resign.
Keith Fitz-Gerald: Is there anything else that you think he could do that would be correct other than let these things fail?
Rogers: Well, at this stage, it doesn’t seem like he can do it. He could raise interest rates - which he should do, anyway. Somebody should. The market’s going to do it whether he does it or not, eventually.
The problem is that he’s got all that garbage on his balance sheet now. He has $400 billion of questionable assets owing to the feds on his balance sheet. I mean, he could try to reverse that. He could raise interest rates. Yeah, that’s what he could do. That would help. It would cause a shock to the system, but if we don’t have the shock now, the shock’s going to be much worse later on. Every shock, so far, has been worse than the last shock. Bear Stearns [now part of JP Morgan Chase & Co. (NYSE: JPM)] was one thing and then it’s Fannie Mae (NYSE: FNM), you know, and now Freddie Mac (NYSE: FRE).
The next shock’s going to be even bigger still. So the shocks keep getting bigger because we keep propping things up and this has been going on at least since Long-Term Capital Management. They’ve been bailing everyone out and [former Fed Chairman Alan] Greenspan took interest rates down and then he took them down again after the “dot-com bubble” shock, so I guess Bernanke could try to start reversing some of this stuff.
But he has to not just reverse it - he’d have to increase interest rates a lot to make up for it and that’s not going to solve the problem, either, because the basic problems are that America’s got a horrible tax system, it’s got litigation right, left and center, it’s got horrible education system, you know, and it’s got many, many, many [other] problems that are going to take a while to resolve. If he did at least turn things around - turn some of these policies around - we would have a sharp drop, but at least it would clean out some of the excesses and the system could turn around and start doing better.
But this is academic - he’s not going to do it. But again, the best thing for him would be to abolish the Federal Reserve and resign. That’ll be the best solution. Is he going to do that? No, of course not. He still thinks he knows what he’s doing.
Keith Fitz-Gerald: Earlier this year, when we talked in Singapore, you made the observation that the average American still doesn’t know anything’s wrong - that anything’s happening. Is that still the case?
Rogers: Yes.
Keith Fitz-Gerald: What would you tell the “Average Joe” in no-nonsense terms?
Rogers: I would say that for the last 200 years, America’s elected politicians and scoundrels have built up $5 trillion in debt. In the last few weekends, some un-elected officials added another $5 trillion to America’s national debt.
Suddenly we’re on the hook for another $5 trillion. There have been attempts to explain this to the public, about what’s happening with the debt, and with the fact that America’s situation is deteriorating in the world.
I don’t know why it doesn’t sink in. People have other things on their minds, or don’t want to be bothered. Too complicated, or whatever.
I’m sure when the [British Empire] declined there were many people who rang the bell and said: “Guys, we’re making too many mistakes here in the U.K.” And nobody listened until it was too late.
When Spain was in decline, when Rome was in decline, I’m sure there were people who noticed that things were going wrong.
[Msg Truncated...]
