Jim Rogers on Banking Bailout: 'Horrible Economics' 9 comments
William Patalon III
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Ask investing icon Jim Rogers about the $700 billion U.S. banking bailout, and he’ll tell you that it’s nothing but “horrible economics.” And with good reason: Most of the major U.S. banks are already bankrupt.
“Without giving specific names, most of the significant American banks, the larger banks, are bankrupt, totally bankrupt,” Rogers said in a recent teleconference at the Reuters Investment Outlook 2009 Summit. “What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent. What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics.”
A long-time China bull, 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 first really 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.” He also made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent to everyone else, 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. Twice last year Rogers granted exclusive interviews to Money Morning Investment Director Keith Fitz-Gerald. In one of the interviews - carried each time as a two-part series in Money Morning - Rogers correctly predicted that the U.S. financial crisis was destined to get much worse before any improvement was visible.
Goldman Sachs analysts last week estimated that banks worldwide have incurred $850 billion of credit-related losses and write-downs since the global credit crisis began last year.
But Rogers said sound U.S. lenders remain. He said these could include banks that don’t make or hold subprime mortgages, or which have high ratios of deposits to equity - “all the classic old ratios that most banks in America forgot or started ignoring because they were too old-fashioned.”
Many analysts have cited the Sept. 15 bankruptcy filing by Lehman Brothers Holdings Inc. [OTC: LEHMQ] as a trigger for the soon-to-follow cratering of the U.S. stock market and accompanying worsening of the U.S. economy.
But Rogers called that idea “laughable,” noting that banks have been failing for hundreds of years. And yet, he said policymakers aren’t doing enough to prevent another Lehman.
“Governments are making mistakes,” he said. “They’re saying to all the banks, you don’t have to tell us your situation. You can continue to use your balance sheet that is phony. All these guys are bankrupt, they’re still worrying about their bonuses, they’re still trying to pay their dividends, and the whole system is weakened.”
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This article has 9 comments:
How anti-American can someone be.. the guy relocated his family to Singapore and now continues to bash the US.
Sure, he's made some great investments in the past. Big deal. Enjoy Singapore there Rogers.
rogers is right about some things and wrong about others. i do agree with him on this much: we have an incompetent federal reserve, treasury and SEC, not to mention the entire u.s. congress, and they earn the criticism they receive. there are a hell of a lot of other u.s. citizens who would agree with him. if you think it makes them less patriotic than flag-waving simpletons, you don't understand have a simple-minded view of patriotism.
On Jan 04 12:18 PM sickofthehype wrote:
> So because he predicted China's coming around, this guy is golden
> huh?
>
> How anti-American can someone be.. the guy relocated his family to
> Singapore and now continues to bash the US.
>
> Sure, he's made some great investments in the past. Big deal. Enjoy
> Singapore there Rogers.
i will attribute your outburst to misplaced sarcasm. sweetie, you cross the line when you question patriotism.
every individual has the right to live where in the hell they please. an American pays taxes to America when they live overseas. for the kind of things jim rogers is involved in, singapore makes better sense than new york.
i personally find few things in America right now which are amazing except for the dedication of the men and woman of our armed forces. for me, criticism of all other topics are on the table.
Good grief you are a simple-minded individual! The mindless "my way or the highway" concept of America is meant only for those who don't understand or care that there is more to the world than America. Reminds me of the folks who vilified anyone who opposed the war in Vietnam[Iraq]. My country love it or leave it! Hey moron - it's our country too and we're not dictating to you what is appropriate for you to do/feel. Get a grip!!!
On Jan 05 12:31 AM bs_o_meter wrote:
> sickofthehype
>
> i will attribute your outburst to misplaced sarcasm. sweetie, you
> cross the line when you question patriotism.
>
> every individual has the right to live where in the hell they please.
> an American pays taxes to America when they live overseas. for the
> kind of things jim rogers is involved in, singapore makes better
> sense than new york.
>
> i personally find few things in America right now which are amazing
> except for the dedication of the men and woman of our armed forces.
> for me, criticism of all other topics are on the table.
When it realizes what the scandalous ones are doing, they will end up in jail or .....period.
Jim Rogers can afford to live where he wishes. The USA is a dangerous place to be right now because of what the bankers exported. Hopefully, they will clean the mess up without too much damage to the other nations and thereby make the world a safer place for everyone!