Jim Rogers is a very capable investment manager. He is extremely lucky to have gotten all the way to the top and to have stayed there for a long time if he is without skills. Obviously, he has made a lot of right calls.
It doesn't necessarily follow that he is always right though. Insisting that he is always right is like saying, "Well, Annie was correct when she said that it will rain today. Therefore, she can never make a mistake when predicting weather."
Many seem to be arguing along the same lines for Jim Rogers' questionable position on the current US crisis.
Yes, he made some good points. Rescuing failed institutions comes with consequences - people who deserve to suffer might get away with their irresponsible actions and that’s not ideal. His call to buy commodities will also probably be proven right down the road.
But his statement below is simplistic in my opinion:
What would I like to see happen? I'd like to see them let these people go bankrupt, let the bankrupt go bankrupt, stop bailing them out. There are plenty of banks in America that saw this coming, that kept their powder dry and have been waiting for the opportunity to go in and take over the assets of the incompetent. Likewise, many, many homeowners didn't go out and buy five homes with no income. Many homeowners have been waiting for this, and now all of a sudden the government is saying: "Well, too bad for you. We don't care if you did it right or not, we're going to bail out the 100,000 or 200,000 who did it wrong." I mean, this is outrageous economics, and it's terrible morality.
I do not understand why it is so hard to see that the half who does not deserve to suffer will get punished too if the other half is allowed to die. Faulty financial institutions, on their way to hell, will surely drag an unquantifiable many.
Counter-parties to these inferno-bound institutions will get hit hard. They will bleed cash as their creditors and other counter-parties start calling their positions. If these institutions even manage to survive, it will not be without collateral damage.
There will be massive layoffs. The side-swipe victims will add up to the unemployment count alongside those who have been cut from already defunct financial institutions. Without a doubt, the rise in unemployment will have a
severe impact on other parts of the economic world.
This is the picture we're looking at if Jim Rogers had his way. He seems absolutely sure that this outcome, where the innocent is punished along with the guilty, will be better than the present actions of President Obama who aims to save the innocent at the cost of letting some guilty parties off.
To me, based on his statements on the current crisis, Jim Rogers is like a guy who, after being asked to compare the count of grass in his farm with the farm adjacent to his, glances across and then simply says, "I’m sure that there are more blades of grass in my farm. And why?! Because I said so!"
