The Long Crisis

Posts Tagged ‘Jim Rogers’

Jim Rogers is a famous investor who often engages in hyperbole in order to vividly make his point. He is listened to with interest by many investors as Rogers has made his billions by being right about major trends ands by backing his insights with large trading positions. Now living in Singapore Rogers has shifted much of his investment focus to Asia. There is a good reason for this as he explains in the following quote.

“Throughout history, the center of the world has shifted to where the capital is, where the assets are. You don’t see any period in history where things are shifting to the debtors, and America’s the largest debtor nation in the history of the world.

Unless somethings are different this time, unless the world’s changed very very dramatically, the center of the influence, the center of the power, the center of the earth, the center of the globe, is going to be shifting towards Asia, because that’s where all the money is. Have you ever heard of anybody saying, ‘Let’s go to where all of the debtors are’? It just doesn’t happen that way.”

No doubt that he is right about no good for America will come from being the largest debtor nation on the face of this earth. Not only is the federal government in debt far beyond its ability to work out of it without serious consequences but state governments as well as local governments are faced with a growing inability to service debt and to provide services.

California has long been considered a bellwether state in the US. The debt related crisis occurring in California now is likely a sign of what is soon to come in many parts of the US. And as Jim Rogers says who will say “Let’s go to where all of the debtors are”. That statement doesn’t mean just people but capital investment.

In the near future unless conditions drastically and miraculously change for the better the United States is going to have a very tough time raising capital at anywhere near a reasonable cost. Money tends to flow where it is treated best. The US government’s reaction to the financial crisis in the US via bailouts and constant interference in what used to be free markets based upon capitalism is not encouraging. Capital flows will increasingly be from the US to other markets.

As Jim Rogers states the center of the world is shifting to Asia. For additional Jim Rogers opinions and forecasts visit Seeking Alpha.

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The billionaire investor and new Singapore resident Jim Rogers has been a long time big player in the commodities markets. A highly successful one at that.

The outspoken Jim Rogers says he isn’t buying stocks in any country these days.

“I’d love to invest in equity markets around the world, (but) I can’t find any I want to buy shares in, including the U.S.,” Rogers told Fox News.

“The world’s got a serious problem, mainly because these guys in Washington don’t understand what’s going on and they’re making it worse.”

The only place other than currency Rogers advises putting money now is commodities. As you might guess Rogers believes that the Washington gang of legal gangsters is well on its way to destroying the value of the US dollar. As the dollar falls in value commodities would tend to increase in value as they are generally priced on world markets in US dollar terms.

The fall of the dollar will be great for commodities, Rogers notes. In addition, “We’ve got the lowest inventories in 50 years for agricultural products,” he says. Fundamentals at big firms like Citibank and General Motors are not getting better, Rogers observes, but fundamentals for commodities are improving and will continue to improve.

“Nobody can get a loan to open a mine … the world’s oil reserves are in fairly rapid decline,” Rogers points out, this causes the current supply of commodities to dwindle, which pushes up prices.

Not everyone agrees with Rogers. “This recession is going to last a lot longer than the one in the 1970s,” Commodity Information Systems President Bill Gary says. “I don’t see any major bull move in commodities in the next several years.”

My own opinion is that the next few years for commodities will be one of extreme volatility as the world wide recession/depression cuts into demand but weather, and financing problems experienced by producers cuts into supply. Low current inventories in many agriculture commodities will add to the volatility as any small increase in demand or crop problems will quickly ramp up prices.

We are therefore likely to experience extreme price movements as speculators and investors have periods of hope that depression conditions are improving and then react to signs that no indeed they are getting worse.

This is not all bad as experienced commodity traders welcome volatility. However, extreme volatility can be challenging even to the best of traders. For sure, the next few years are going to present challenging commodities markets even if we have a run away bull market in commodities as Jim Rogers forecasts. Corrections within the trend are likely to be fast and violent and test the convictions of even the most seasoned traders.

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One of the most famous investors in the world is Jim Rogers, who was once a partner of George Soros. The highly successful billionaire and always outspoken Rogers has a strong reaction when you mention AIG and the current bailout mania. Rogers thinks that pumping more money into AIG puts the U.S. economy and the US dollar at risk of ruination.

“Suppose AIG goes bankrupt, it is better that AIG goes bankrupt and we have a horrible two or three years than that the whole U.S. goes bankrupt,” Rogers said in a CNBC interview.

“AIG has trillions of dollars of obligations, let them fail, let the courts sort it out and start over. Otherwise we’ll never start over.”

“You are watching something in front of our eyes, very historically, which is basically the destruction of New York as a financial center and the destruction of America as the world’s most powerful country,” said Rogers.

I have often wondered about the logic behind how you cure deep rooted problems of over leverage and of excessive debt by creating even more debt and leverage. Actually mountains of it all on US government credit and by depending upon the savings and investment of foreigners to fund it all. It’s like taking care of a drunk by pouring the staggering fellow another strong overflowing round of drinks. If you keep on doing that the poor fellow is certainly not going to sober up. He might even die of alcohol poisoning.

Yet the “best and brightest” of our over active public servants in Washington are playing the role of overly generous bartenders. The economy is being further poisoned by their actions even though it may seem to look better over the short run. AIG is but one of many crazy bailouts and schemes currently being funded by Uncle Sam with money that he does not have. The printing presses are starting to smoke as trillions are being churned out as a “keep the faith” currency.

As Jim Rogers says from his new digs in Singapore, “These people are nuts”.

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