Jim Rogers on the Economy - Bearish on Stocks and Government 64 comments
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Jim Rogers, the famed investor and writer, is always informative and fun to watch. Below is a recent Bloomberg interview.
Jim Rogers continues to be bearish on US stocks, but has covered his short position in long term Treasuries "because of Mr. Bernanke." Presumably that means Rogers thinks the Fed can keep yields low by buying Treasuries. He also briefly mentions that he's shorting IBM, GE, and JPM.
Rogers says Tim Geithner doesn't know what he's doing, and is responsible for our current situation because of his role as the NY Fed president. That seems correct to me.
Rogers also repeats his solution: let all the insolvent companies fail. Wipe them out and we'll have a fresh start. The economy will start growing again. He didn't mention Korea this time, as an example of a country that let its businesses fail and then had a great growth rate.
I agree, but here's a caveat about growth. Let's say we're at 100 right now and letting everyone fail takes us to 25 (made up numbers, just for the sake of an example). Let's say after that we grow 10% annually (an awesome growth rate). It would take us over 14 years to get back to where we are. This is to say, just because an economy is growing doesn't mean that it's better off than it was a few years ago. Nevertheless, if we don't let the incompetent fail and keep them around as zombies, we might very well get to 25 anyway, but over a longer period of time. And then we might not grow at all. Look at Japan.
One thing is clear, as Rogers has been saying; you can't solve a problem caused by too much debt and consumption by more debt and more consumption.
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This article has 64 comments:
We don't need him, too!
If we put in supports to keep things up, we will emerge over several years as a socialist society. If we let values fall and don't create public debt to replace private debt, we reset and can keep our innovation associated with capitalism.
We sometimes forget why capitalism is important. We use the word "growth". We "grew" in the last five years - all illusion, money supply growth caused by credit creation and the elimination of M3 which stopped investors from seeing real inflation. In fact, capitalism allows for efficient utilization of resources by everyone, improving the human condition. Isn't improving the human condition the goal of socialism as well.
Check out what they said compared to what the truth was and you'll quickly understand the people you need to be blaming.
In other words...don't blame short-sellers (like me) as stocks fall unless you're also going to give us credit and celebrate us as we're "squeezed" when stocks are rising.
Remember...some of history's most dynamic stock advances can be directly attributed to monster short squeezes. Funny how I never hear any of you momentum leeches complaining as stocks spike higher while you're making money on our backs during those situations.
On Feb 13 06:51 AM apppro wrote:
> Look, that jerk sold all his U.S. assets and moved to China. Let
> him stay there are keep his mouth shut at the same time. We have
> enough moron short sellers here taking part in "The Shorting of America".
>
>
> We don't need him, too!
Who can say that Nationalizing a bank is less expensive for the taxpayer than supporting it for a few years while the bank brings in new loans with safer terms for the bank?
Are the IRS or postal service free of perks for employees? are government systems in general more efficient at dealing with markets for their services?
The fact is that lots of people who never should have gotten credit got credit, and so they need to adjust to a world and a lifestyle without it.
that will hurt.
America is more than a territorial boundary, in which everyone finding themselves within its borders can claim patriotism. True American patriotism is tolerance, self-sufficience, and the desire for the freedom afforded by respecting everyone enough to let them live their own lives.
On Feb 13 10:52 AM 31October wrote:
> "Please don't listen to this traitor."
> If an American thinks the dollar could collapse from his government's
> fraud, moves to protect his family, and spends years on TV trying
> to alert the American sheeple to what is happening, then he is a
> traitor? I guess Jefferson and Frankin must have been rat bastards,
> too.
>
> "Look, that jerk sold all his U.S. assets and moved to China." <br/>No,
> he didn't.
>
> "He's a runt, physically and morally."
> That is a brilliant argument that summarizes the risks & rewards
> of a commodity-backed currency and tells the reader exactly how to
> prepare for bank insolvency.
>
> No more name calling. If you cannot understand concepts such as competitive
> advantage, velocity of money, etc., then get off of a *financial
> website.*
Add one more to the list of feel-good, small-picture thinker baby boomers who have been doing their best to dynamite our country for the last fifteen years: Skilling, Madoff, Bush, Milken, etc, etc, etc.
On Feb 13 02:37 PM emellis wrote:
> Isn't this the same fool who moved his family to Asia because he
> believes that is the future? And the same fool who drove a cusomized
> Mercedes across China? Wouldn't put too much stock into what he says.
>
>
> Add one more to the list of feel-good, small-picture thinker baby
> boomers who have been doing their best to dynamite our country for
> the last fifteen years: Skilling, Madoff, Bush, Milken, etc, etc,
> etc.
You are right about too much debt. It was probably the primary driver for inflating housing prices. The combination of lax lending standards and low interest rates in conjunction with a commission based compensation model for originators, processors and Wall Street packagers drove house prices to unsustainable levels. The process is now reversing and will not be helped by making more credit available so we can restart this process. The evolved mortgage lending model with all of its commissions and financial engineering should probably be reevaluated.
Jim is right about the need for somebody to recognize the need for structural changes.
Jack
he has a proven record and is right up there with the likes of Warren Buffet and George Soros
anybody who is giving Jim a hard time is'nt listening to his message
if you listen he is saying go long on the basics ie food water commodities etc because we are in for VERY tough times ahead
buckle up it's going to get very ROUGH!!!!!!!!!!!!!!!!!...
Its not 'cuz things are going badly for the US, obviously-- he left the US and moved to Singapore so he long ago made his bear bet on the US.
What's interesting about Rogers is that some of his macro-bets have turned out wildly wrong. Roll back the tape, and he was vociferously short dollars, long commodities, long currencies, short Treasuries, and super long China.
In this clip, the only specific positions he mentions are short IBM, GE & JPM. Have you noticed that he's not talking about commodities any more? And he's not talking about China either?
No way to know, because the guy doesn't run a fund which reports anything anymore, but my guess is that his long commodities/short dollars/short Treasuries bets have gone wildly wrong. Notice how pissed off he is at Geithner, and notice that he says that he covered his Treasuries short because of Geithner.
My guess is that he's lost a lot of money, and that he did the typical long-short trade. Some of his shorts have done well, but some of his conviction longs have done disastrously. Without published numbers, no one but Jim Rogers knows how he did in 2008, but I'm guessing, "very badly".
Its just a guess.
But watch that video again, and ask the question: Does that sound like a guy who's _made_ a lot of money?
I'd suggest that letting the failures fail would take us down to 80-85, not 25!
On Feb 14 08:45 AM prudentinvestor wrote:
> You state " Let's say we're at 100 right now and letting everyone
> fail takes us to 25 (made up numbers, just for the sake of an example).
> Let's say after that we grow 10% annually (an awesome growth rate).
> It would take us over 14 years to get back to where we are."
>
> I'd suggest that letting the failures fail would take us down to
> 80-85, not 25!
We do have one experience of "let the failures fail" -- from 1929 to 1933.
Different times and circumstances, but the experience was much closer to %25 than %80-85
Peak to trough, the DJIA fell %89
Peak to trough, GDP fell %50
GDP didn't recover to 1930 levels for a decade.
The "let the failures fail" argument is appealing, but it would be prudent to think through what this would actually entail, not just a "rosy scenario", but a "worst case". The historical evidence is that %80-85 is too optimistic
Rogers shorts US bonds and you scream traitor? What?
On Feb 13 02:38 AM samrock001 wrote:
> This cookie Jim Roger is shorting America. He is one of the biggest
> sucker. He was recommending the whole world to go long commodities
> when he himself was shorting it. This bastard want to short the government
> bonds to cause more pain to Americans since yield on these bonds
> is related to the mortgage rate, funding rate in debt/financial markets.
> Please don't listen to this traitor.
You cannot solve a problem that is based on too much debt and too much consumption, by offering a solution that creates more debt and more consumption.
How in the world anyone can disagree with this is beyond me. But I guess that's why we're in for a massive contraction of the US economy. The die is cast, and you can thank the policies of the last 19 years for getting us in this mess and you'll be able to thank the Geithner plan for accelerating and amplifying the carnage that is surely to follow.
I'm of the mindset let's get on with it already, so we can get closer to a point where the right policy decisions and new institutions can step into the breech and we can begin the rebuilding--hopefully led by people who understand History and understand the value of solid regulation. Nothing wrong with capitalism mind you, it just needs to be contained or you get the kind of rampant destruction we're seeing once the boom cycles go bust. And don't be a fool like Alan Greenspan and think you can stave them off. YOU CANNOT!
To all those who say he is a jerk: Why don't you call Wall Street bankers and the politicians who were paid by them jerks? Get real and down your high American horse.
To all those who say he is a jerk: Why don't you call Wall Street bankers and the politicians who were paid by them jerks? Get real and down your high American horse. This pseudo-patriotic gibberish is plain immature.
Why is it wrong to point that out?
On Feb 13 02:38 AM samrock001 wrote:
> This cookie Jim Roger is shorting America. He is one of the biggest
> sucker. He was recommending the whole world to go long commodities
> when he himself was shorting it. This bastard want to short the government
> bonds to cause more pain to Americans since yield on these bonds
> is related to the mortgage rate, funding rate in debt/financial markets.
> Please don't listen to this traitor.
According to the United States Constitution, the only this crime so defined. Article III Section 3 delineates treason as follows:
"Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.
The Congress shall have Power to declare the Punishment of Treason, but no Attainder of Treason shall work Corruption of Blood, or Forfeiture except during the Life of the Person attainted."
So who would be more "Traitorous" here? Would it Jim, or the U.S. government calamitous economic polices and the irresponsible financiers who got us into this mess?
Ex U.S. Comptroller David Walker claims the U.S. has $56 trillion in unfunded liabilities. Shorting America and its currency is not a difficult call. We might as well protect our wealth in the process.
I NEVER thought I'd say this, but it's becoming easier and easier to see why a group of desparate Europeans elected guys like Hitler and Mussolini. I've seen the alternative (Democratic-Republican... and all they've done is devalue my savings and fixed assets while killing the ability to make products in this country. Does anyone really think Obama, Geithner, & Co. are going to be any better than Bush, Rove, Paulsen & Co. The names are different, but the results will be the same.
For all his pro China rhetoric, and for all of China's growth, the bottom line is that the Chinese stock market has underperformed the US market the last 5 years,even as their growth far outsurpassed us. I have read about about a Chinese journalist bragging about manipulating the stock market, and is was written that Obama believes China is manipulating the yen(Although Obama has never personally said this to my knowledge) One thing that is probably true is that if the government is corrupt(and China is communist)your moneys will probably go down the poohole.
I have come to realize that if you want to invest in China, or internationally, it is probably safer (and not necessarily less profitable) to invest in companies who do business with China or internationally such as IBM, Pepsi, Caterpillar,BHP Bilton, etc.
One last thing:Don't move to China just to hope to improve the performance of your stocks(like this guy did).That is silly!
On Feb 14 02:18 AM Not A Stupid Obama Robot wrote:
> Rogers is right. Easy credit, materialism, instant gratification
> (and illegal aliens) got the U.S. into this mess. Now the new American
> president wants easy credit, materialism, instant gratification and
> illegal aliens. Go figure why American voters are so stupid, or,
> they want non-stop easy credit, materialism, instant gratification
> and illegal aliens to do the work t a tenth of the cost!
On Feb 14 03:15 PM Tranquilmeditation wrote:
> Ex U.S. Comptroller David Walker claims the U.S. has $56 trillion
> in unfunded liabilities. Shorting America and its currency is not
> a difficult call. We might as well protect our wealth in the process.
But does anything think the current Administration is going to step out of the way and let markets work?
Bush intervened; Obama will try to do more.
> This cookie Jim Roger is shorting America. He is one of the biggest sucker... Please don't listen to this traitor.<
This scum-bag samrock001 is outright dangerous. He is one who leads to a civil war dividing Americans into enemy categories. Such people must be hang before they can inflict damage on America and its people.
Why they still making influence so far ?
The fiscal stimulus will be mostly to keep the patient alive until that point and doing things that help the future while you are at it.
I am not sure that that nationalizing the insolvent banks is not the answer. Yes, the shareholders are wiped out, but the shares are already down to very low dollars. Furthermore, shareholders will learn a huge lesson about corporate oversight through their board of directors. Once nationalized, the government does not have to value the toxic assets, but simply write-off the loans that do not perform (mark to market will not matter to the government). In 2-3 years, the government will privatize approporiately sized institutions. In the meantime it can act as it wants as the nation's bank. Private capital will operate in a twilight zone with the government there, ut they will figure it out. This would be a new chapter in America's tradition (unwelcome by our ideals), but it might be the best plan. I hope Geitner and the POTUS are bold enough to do it if best.
Don't blame the short sellers. Short sellers play as important a role in the markets as the buyers. Short sellers bear the same, if not higher (because of rules which usually favor buyers), risks as buyers.
People who call Jim a traitor are imbecile.
As for the issue of solving a debt problem with more debt, I don't think it's necessarily an absurdity. Yes, it's absurd if you think of the US as one entity, but the truth is there's many individuals and companies who are perfectly solvent and who may need loans. Who here on this board has never applied for a loan? Not everyone who likes a drink is an alcoholic.
> I am not sure that that nationalizing the insolvent banks is not
> the answer. Yes, the shareholders are wiped out, but the shares are
> already down to very low dollars. Furthermore, shareholders will
> learn a huge lesson about corporate oversight through their board
> of directors. Once nationalized, the government does not have to
> value the toxic assets, but simply write-off the loans that do not
> perform (mark to market will not matter to the government). In 2-3
> years, the government will privatize approporiately sized institutions.
> In the meantime it can act as it wants as the nation's bank. Private
> capital will operate in a twilight zone with the government there,
> ut they will figure it out. This would be a new chapter in America's
> tradition (unwelcome by our ideals), but it might be the best plan.
> I hope Geitner and the POTUS are bold enough to do it if best.<br/>
On Feb 13 02:38 AM samrock001 wrote:
> This cookie Jim Roger is shorting America. He is one of the biggest
> sucker. He was recommending the whole world to go long commodities
> when he himself was shorting it. This bastard want to short the government
> bonds to cause more pain to Americans since yield on these bonds
> is related to the mortgage rate, funding rate in debt/financial markets.
> Please don't listen to this traitor.
Such men are the feedstock for Nazis and Communists, and all the other tyrannical regimes, because they do not question authority, believe whatever they are told, and accuse others, who think for themselves, and don't behave like zombies, of being "traitors".
In short, whether he is right or wrong, we need more people like Jim Rogers, and fewer people like samrock001.
Ummm, if businesses are ready to fail then, sir, we are not where you think the are today. Does pretending that businesses are insolvent make you feel any better?
On Feb 14 05:50 PM otbricki wrote:
> Any economist who knows anything recognizes that immigration, both
> legal and illegal is absolutely key to the long term growth of America.
> Otherwise we do not have any cheap labor pool needed compete with
> 3rd world countries, our population would be declining, and there
> would be no pool of highly motivated 2nd generation Americans who
> are traditionally the greatest source of entrepreneurs in this country.
> Yes first generation illegal immigrants are a drain (about $50 billion
> per year), however if you include 2nd-4th generation children of
> illegals the picture becomes very different - to the tune of + $1
> Trillion.
>
> On Feb 14 02:18 AM Not A Stupid Obama Robot wrote:
On Feb 14 05:50 PM otbricki wrote:
> Any economist who knows anything recognizes that immigration, both
> legal and illegal is absolutely key to the long term growth of America.
> Otherwise we do not have any cheap labor pool needed compete with
> 3rd world countries, our population would be declining, and there
> would be no pool of highly motivated 2nd generation Americans who
> are traditionally the greatest source of entrepreneurs in this country.
> Yes first generation illegal immigrants are a drain (about $50 billion
> per year), however if you include 2nd-4th generation children of
> illegals the picture becomes very different - to the tune of + $1
> Trillion.
>
> On Feb 14 02:18 AM Not A Stupid Obama Robot wrote:
cosmos.bcst.yahoo.com/...
On Feb 14 07:10 AM Crocodilian wrote:
> Does anyone else notice how distressed Jim Rogers looks and sounds?
>
>
> Its not 'cuz things are going badly for the US, obviously-- he left
> the US and moved to Singapore so he long ago made his bear bet on
> the US.
>
> What's interesting about Rogers is that some of his macro-bets have
> turned out wildly wrong. Roll back the tape, and he was vociferously
> short dollars, long commodities, long currencies, short Treasuries,
> and super long China.
>
> In this clip, the only specific positions he mentions are short IBM,
> GE & JPM. Have you noticed that he's not talking about commodities
> any more? And he's not talking about China either?
>
> No way to know, because the guy doesn't run a fund which reports
> anything anymore, but my guess is that his long commodities/short
> dollars/short Treasuries bets have gone wildly wrong. Notice how
> pissed off he is at Geithner, and notice that he says that he covered
> his Treasuries short because of Geithner.
>
> My guess is that he's lost a lot of money, and that he did the typical
> long-short trade. Some of his shorts have done well, but some of
> his conviction longs have done disastrously. Without published numbers,
> no one but Jim Rogers knows how he did in 2008, but I'm guessing,
> "very badly".
>
> Its just a guess.
>
> But watch that video again, and ask the question: Does that sound
> like a guy who's _made_ a lot of money?
Step right up folks and now, on with the show!
Well, let's see. He publicly and loudly warned against Alan Greenspan's bubblenomics. He advised against solving all our problems with more debt. He tipped us off about the commodities bull market back when hardly anyone else was. And as for the current state of commodities, I recall an interview with him where he was asked back in early '08 if anything could go wrong with commodities. His answer was yes, if China were to have a hard landing, that would be trouble for commodities. The Shanghai index gave early warning that China was indeed headed for a hard landing.
With traitors like him, who needs friends.
On Feb 14 09:57 AM yellowhoard wrote:
> Wow! These personal attacks from the left truly define what we are
> up against over the next several years. Ad hominem attacks seem to
> be the only way the "enlightened class" can rebut thought that they
> cannot counter logically.
Does this mean your stand is with the "right"?
is the fact that Mr. Rogers investments are followed
by a lot of people. He has been right most of times:
long in commodities in 2003-2007, shorting FNM
and financials in 2008 and long in gold recently,
he also had some disappointing plays: he did not jump
out of the Chinese bubble in 2007 -2008 and was
shorting USTBs in Q3-08. But he was smart enough to
recognize mistakes and be flexible. We are all learning with
him. The good thing is that he shares
a lot of information with the world, and as the more
info we have the better for all. Long life Jim, long life
all of you too. The man is a human being, come on,
do your bets and dont blame other investors.