Jim Rogers on the Bear Stearns Bailout

Bloomberg tracked down Jim Rogers somewhere in Asia and he was none too pleased with the way the U.S. government has been throwing its money around.

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On why Bear Stearns was bailed out:

You know the reason they did it this way was because, if Bear Stearns had to declare bankruptcy, you'd realize that Bear Stearns paid out billions of dollars in bonuses in January - six weeks ago. If he let them go into bankruptcy, they all would have had to send back their bonuses.

This is what they're doing, they're doing it so they don't have to give back their bonuses. That's why they didn't put them into bankruptcy. Jamie Dimon has gotten a great deal because the Federal Reserve is paying for it. The Federal Reserve is using taxpayer money to buy a bunch of Bear Stearns traders' Mazeratis.

On letting banks fail:

Investment banks have been going bankrupt since the beginning of time. What are you talking about? Let somebody go bankrupt - it's not the end of the world.

You remember what happened in the 70s when they tried this tactic - when Arther Burns kept printing money. Finally, interest rates had to go to over 20 percent and they had to bring in Paul Volcker who had to take draconian measures and put the country into a serious recession. How much more money do you think the Federal Reserve has?

On risks to the banking system:

In 1966, the entire Japanese financial community went bankrupt. Every broker in Japan was in bankruptcy. Japan came out of that and became one of the great powerhouses of the world.

In 1907, everbody on Wall Street was bankrupt. Everybody was bankrupt in 1907. America recovered from that and had a very nice future. Are you telling me that we're never going to have bankruptcies in the financial community again?

On Alan Greenspan's role in this mess:

The first two central banks in America failed. Between Greenspan and Bernanke - I've written this, it's in my book, long before this happened - they're setting up the failure of the central bank. The demise of the Federal Reserve.

The first two failed, this one is going to fail too - because of Greenspan and Bernanke. Greenspan laid the perfect foundation for Bernanke.

Interestingly, four or five Bloomberg articles used quotes from this interview but none of the material above. They just used excerpts from the first part of the clip on the U.S. dollar and commodities.

Comments

[Augustus]

He's right about the bonuses. Except that they were in BSC shares. Now about worthless. He takes a good theme that some bankruptcies would not kill the USA. But then kills his own argument. Heh, Rogers, Ask that guy Joe Lewis if the Fed bailed him out?

[User 165064]

ask jimmy boy how his refco positions are? hes nothing but a short bettor [Edited for content]

[User 165073]

well, it is easy to sit back and pass judgement on Bernanke. Try to be in his shoes. As they say, the game is not over yet, for all you know history might very well look back at Bernanke as one of the greatest central banker.

[User 165073]

well, it is easy to sit back and pass judgement on Bernanke. Try to be in his shoes. As they say, the game is not over yet, for all you know history might very well look back at Bernanke as one of the greatest central banker.

[sammyg123]

Bernanke is slow on the trigger. I doubt he'll be seen as the greatest central banker. Let's just hope for now that he's the right man for the job, and let history be as is...

[TGoodwin]

Rogers says;
The first two central banks in America failed.

Actually,the first bank was designed for a 10-year priming of the system. Alexander Hamilton might have extended its life had he and Aaron Burr got alog well.

The Second Bank was managed by Nicholas Biddle who personified central bankers everywhere. King George of England set in motion a chain of events that led to the banks downfall. He had a British army tangle with Andrew Jackson at New Orleans. Old Hickory gained a lot of fame from the welcome he extended to the British army.

It took two terms in the White House before Jackson could get the best of Nicholas Bibble. It was Old Hickory's fame that enabled him to get that second term; he won that at the battle of New Orleans.

As to the demise of the Federal Reserve -- bring it on; the world will be a better place.

[NormanLepoff, M.D.]

Thanks for the article. The comments are good too. Jim Rogers does not live in the USA and I do not know how much he cares about our country. If we had multiple bank failures it would be horrible for our entire country. Naturally, he had to mention his book. I am sick and tired of these people selling their books.

[Nat]

Jim Rogers has done his home work. If Americans could take their head out of their collective ass... maybe they would make some money on his information.

[User 165251]

Norman: I suggest you read Frédéric Bastiat's essay, "What Is Seen and What Is Not Seen".
We see, in plain view, the Fed riding to the rescue and (for now) preventing "multiple bank failures"; but the consequences of this policy are not quite so transparent.

[DavidRicardo]

Jim Rogers has a big mouth, but he puts his money where his mouth is. And so far he's done brilliantly.

However, I think I'm beginning to detect too much overconfidence and too little caution in this man. Has he been brilliant -- or lucky?

[mkreisel]

Gurus with big mouth will always self-destruct.

Look what happened to Joe Granville.

[John23]

I think Jim is somewhat misunderstood in the media.

He comes across in interviews as eccentric and sort of "out there" with his views (the demise of the federal reserve, bernanke is a nut, etc), but he's just comparing whats going on now to history. If you read his books...investment biker, adventure capitalist, and read old interviews of him, he's a real student of history.

Hes comparing the dollar to currencies that fell before it (pound sterling, dutch gilder, etc), he compares the fed to other central banks around the world. In one of his books, he described the 90's FED and Greenspan as a historical anamoly, the idea that central bankers as gods that can weave magic. Thats only been the case in the last 10 years.

He's brilliant, he has a brilliant model of how the world works. But it doesnt come out like that all the time.

[Dr. KennethNoisewater]

It doesn't hurt that most financial 'press' only want to hear sound bites and don't offer time or room to discuss things like a _Charlie Rose_ or _Firing Line_... So it probably comes out more glib and facetious than it really is..

[aka Beaudeau]

Rogers has had a a long career of being in front of the curve.
His early work with Soros speaks for itself.
His "lifestyle" since then has taken him to all points of the globe.
The torch is being passed from "Lady Liberty" to the "East": Hong Kong,Shanghai,Singapor... and Mumbai are all in major transition.
Wait until Detroit gets a taste of what is to come from China and India, fuel economy,panache, and price. Goldman Sachs and others are making private equity investments there. Some quick returns have helped their earnings over the last several quarters. Why do you think Henry P. spends so much time there? General Electric is playing the infrastructure in these countries as well. Chinese workers save large amounts of their earnings rather than fill up Public Storage units with "junk" they will never use or need again. Track public storage units with trade deficit and you will see that America is storing junk while China stores our dollars. China solves the water and pollution problem and maybe even Rogers will move his family to Hong Kong,Shanghai, or Hangzhou.
American and Western entertainment is happening on a regular basis in Macao as evidenced by the recent Celine Dion event last Saturday night. I suspect more will happen before, during and after the Olympics and Shanghai Expo in 2010. Goodnight!!!

[drmichaelschneider]

Jim Rogers is always interesting. He also has been right more than anyone else in recent years on a whole range of important matters. It's an advantage of being a "private investor" as he calls himself to work on getting things right instead of trying to put lipstick on pigs as we have seen some analysts devoting themselves to or figuring out what is the thing to do politically.

[kuklamu]

Jim Rogers is a snotty little know it all. He is probably secretly wishing ill on the USA and the dollar so he can profit on it overseas....my opinion?....in the long run never bet against the 'white man.'

[toptrader]

I've made so much money following Jimmy it's insane- he called the commodities run from the bottom. He told me to get short the financials over a year ago, he got me short Fannie at 62. Only take advice from people who have proven themselves by putting their money where their mouths are. Woner if any of the naysayer above have earned 4,000% over a 10 year period? I'd like to thank Jimmy for my Maserati (brand new Quattraporte).

[Dr. Aziz]

On Mar 27 12:28 PM kuklamu wrote:

> Jim Rogers is a snotty little know it all. He is probably secretly
> wishing ill on the USA and the dollar so he can profit on it overseas....my
> opinion?....in the long run never bet against the 'white man.'


Rogers a "snotty little know it all". You don't know what the hell you're talking about, you dork. Rogers has proven himself consistently over a 40 year period. And that's why he dines on caviar and champagne, and why you drive a broken down Pinto, you moron.

Dr. Aziz

[Dr. Aziz]

Rogers a "snotty little know it all"? You don't know what the hell you're talking about, you dork. Rogers has proven himself consistently over a 40 year period. And that's why he dines on caviar and champagne, and why you drive a broken down Pinto, you moron.

Dr. Aziz