JIM ROGERS INTERVIEW - 1st March 2009
Given the severity of the financial crisis preoccupying the globe,
Barack Obama's $800 billion stimulus package was meant to grab the
world's attention. But did it? When Wall Street veteran Jim Rogers
speaks the investment community actually tends to take notice. After
all, he is a former business partner of billionaire philanthropist
George Soros. Earlier this month, he raised the ire of Gordon Brown
when he declared Britain 'finished' and urged investors to dump the
sterling. So, what does this outspoken monetary maverick think of all
those monster stimulus packages currently being doled out from
Washington to Canberra? George Negus spoke with him earlier from his
base in Singapore.
GEORGE NEGUS: Jim Rogers, thanks for your time. As I
understand it,
your views on the current world financial and economic crisis are
pretty blunt. I mean, is it true that you believe, given that we've
been hearing from Barack Obama all week about his stimulus plan, that
it is actually going to make things worse, rather than better?
JIM ROGERS, CHAIRMAN, ROGERS HOLDINGS: For the people who get the
money, George, it is going to make it better for them but for the rest
of the country and the rest of the world, no, it's not going to make
things better. It's going to make things worse. We are in perilous
times and he doesn't seem to understand that he is making things much
worse.
GEORGE NEGUS: I guess I have to ask you - and I know that you
have had
years of experience on the financial markets - does anybody really know
- let alone the cause of this - what the solution is?
JIM ROGERS: Well, I will tell you what has worked in the past, George.
What has worked in the past is you let people go bankrupt. When they
fail, you clean out the system, you take a year or two or three of
paying whatever it is, and then you start over. The competent people
come in, take over the assets from the incompetent people and you start
over.
This way of bailing out everybody in sight, it doesn't work. The
Japanese tried it in the 1990s. They had zombie banks and zombie
companies and they still talk about the 1990s as the lowest decade. It
is 19 years later in Japan since they tried all of that. The stock
market is down 80% - 8-0-% from where it was 19 years ago. This has
never worked. It doesn't matter... I am not doing it ideologically
here, I am saying this has never worked. The things that have worked
are - take your pain and start over.
GEORGE NEGUS: So, you are saying all this bailing out that is
going on
- because bailing people out seems to - as you have suggested - be the
way that everybody thinks we should go. That's what the stimulus
packages are all about - to get people to spend more money. I mean,
there's no way in the world that you or me or anybody else is going to
stop the Obamas and the Browns and the Rudds of this world, in our
case, from going ahead with the stimulus packages.
JIM ROGERS: I am afraid you are right. All of these politicians, they
run around and think they've got to be doing something, and if they can
pass out enough money they hope they will get through the next election
and some day things will be OK. Unfortunately, they are not going to be
OK. The only way that we are going to get rid of them, George, is that
these programs are going to fail and then they'll be thrown out of
office.
GEORGE NEGUS: What about our friend Mr Bernanke saying that it
will be
all over by the end of this year? He's a little more optimistic than
yourself, to say the least.
JIM ROGERS: George, Mr Bernanke has never been right - he's been in the
government for six or seven years, he has never been right. If I came
on your TV show every week and was wrong eight or nine weeks in a row
you would probably stop inviting me. Mr Bernanke has been wrong 300
weeks in a row and he has never been right. If you get your advice from
Mr Bernanke, George, you are going to go broke very quickly.
GEORGE NEGUS: And you are apparently not a fan of the current
Secretary
of the Treasury either.
JIM ROGERS: Oh my God, you are bad for my nervous system, George, No,
of course not. Mr Geithner was head of the New York Fed for several
years. The New York Fed was the group that was in charge of Wall Street
and the major commercial banks. He sat there and saw all this
happening. He's part of the problem. It is astonishing to me that Mr
Obama ran on a platform of change and he's brought in people who caused
the problems and are there now supposed to solve the problems.
GEORGE NEGUS: What about the countries that are vital to the
economic
structure, the infrastructure of countries, like the US and the UK and
even our own, that are too big for us to allow them to fail?
JIM ROGERS: What do you mean too big to fail? There's no such thing as
too big to fail. Listen, there are plenty of banks in Australia,
America and other places who have been doing what they were supposed
to, minding their manners, not going doing crazy things, waiting for
these moments to come so that they could come in and expand their
market share and grow and prosper. Now, these people are being held
back by all these "banks that are too big to fail" because the
governments are giving them free money and saying, "OK, now you compete
with the competent people." I mean, George, this is horrible economics
and it is outrageous morality. Not that politicians care about
morality.
GEORGE NEGUS: Jim, why shouldn't we see you as yet another
doomsayer?
JIM ROGERS: I am not a doomsayer. I am very optimistic about a lot of
things.
GEORGE NEGUS: Make me feel better then, Jim, because you are
painting a
pretty bleak picture.
JIM ROGERS: Listen, we have to face reality, George. I have. If you
don't face reality and you sit there and twiddle along and believe Mr
Bernanke that everything is OK, you are going to get hit by a
two-by-four and it's going to hurt very, very, very badly, so I would
urge you to be prepared. But some parts of the world's economy are
going to boom. George, you should become a farmer. Agriculture is about
to become one of the most exciting industries in the world for the next
20 or 30 years. There are plenty of people in the world who are going
to do extremely well in the times that are coming up, but it's not Wall
Street, it's not the City of London - the people who have been driving
Lamborghinis for the past 10 years are suddenly going to have to drive
taxis. Maybe they will learn to drive tractors so they can work for the
farmers who will now have the Lamborghinis.
GEORGE NEGUS: Gordon Brown wasn't exactly impressed when you
told him
that Britain was finished, and that you will pulling out your sterling
and told everybody else to do the same. It had a big impact in the UK.
What are you doing with your American dollars?
JIM ROGERS: Well, I do own US dollars but I plan some time this year to
get rid of the rest of my US dollars and my few remaining US shares.
GEORGE NEGUS: Seriously? And invest where, Jim? Where are you
going to
put your money?
JIM ROGERS: Ah, George, that is a brilliant question. I don't know
right now but it looks as though I will probably wind up putting a lot
of it into real assets such as cotton or zinc or gold or oil or
whatever it happens to be.
GEORGE NEGUS: Into the real economy, Jim, I can say, into the
real
economy, not the unreal economy of the finance world.
JIM ROGERS:Absolutely, I'm talking about real products which people use
every day. You and I know what cotton and silk and zinc are, most of us
didn't have a clue what dotcom was or what a CDO was and yet there were
billions of dollars put into them and that's all going to change now,
George. Those days are over. The financial community is going to be a
very, very bad place to be for another 10 or 20 or 30 years.
GEORGE NEGUS: Are we looking at not the Great Depression but
the even
Greater Depression?
JIM ROGERS: If you ask me, yes, we are going to have another depression
in the United States because the politicians keep bungling. That's what
caused the Great Depression in the 1930s - politicians around the world
made mistake after mistake after mistake and I'm afraid it's happening
again, including protectionism.
GEORGE NEGUS: You don't blame, like so many people are, the
bankers and
the hedge market players like yourself. They are not to blame, it's the
politicians?
JIM ROGERS: It's mainly central banks, more than anybody else. If you
have only have one single cause it's the central bank in the United
States. We had a man named Alan Greenspan running the central bank. He
refused to let anybody fail. Any time people got into trouble they
would call up and say, "Save me, save me, save me." He would bail out
everybody. Had he let the market work, had he let people fail over the
past 15 years, Lehman Brothers would still be in business. Bear Sterns
would still be in business.
GEORGE NEGUS: Jim, let us finish on this note. Here in
Australia, we're
on the stimulus bandwagon, for better or worse, rightly or wrongly,
what's your feeling about this country at the moment? Because they seem
to be going down the same - our mini-version of the Barack Obama trail?
JIM ROGERS: Australia should be one of the countries that's going to
come out of this in good shape. Because you have lots of natural
resources. I said before that people who are now going to inherit the
earth are going to be people that produce real goods, such as
Australia. Unfortunately, your politicians are a bad as American
politicians - they keep spending money on projects that are just
make-work projects rather than building for the future. Look at China
and Singapore, for instance - they are mainly spending money trying to
make the countries more competitive down the road.
GEORGE NEGUS: You seem to be saying that this country is
kidding itself
if we still regard ourselves as the lucky country.
JIM ROGERS: While Australia has been a lucky country at times I'm
afraid Australia's not so lucky right now because your politicians keep
making mistakes, just like mine do.
GEORGE NEGUS: Jim, it's good talking to you. I hope that next
time we
talk things are looking a little brighter. I hope that your optimism
for the long-term future we see a little earlier maybe.
JIM ROGERS: George, go become a farmer.
GEORGE NEGUS: I will think long and hard about that, Jim.
Sounds like
good advice. Thanks for your time.
JIM ROGERS: Thank you.