Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers said Europe’s bailout of indebted nations to overcome the sovereign-debt crisis is just “another nail in the coffin” for the euro as higher spending increases the region’s debt.
Speaking in a Bloomberg interview in Singapore on Tuesday, Rogers said “I was stunned,” adding “This means that they’ve given up on the euro, they don’t particularly care if they have a sound currency, you have all these countries spending money they don’t have and it’s now going to continue.”
The 16-nation currency weakened for a second day against the dollar after rallying as much as 2.7% on Monday, when the governments of the 16 euro nations agreed to make loans of as much as €750 billion (U$962 billion) available to countries under attack from speculators and the European Central Bank pledged to intervene in government securities markets.
Greece’s budget deficit of 13.6% of gross domestic product is the second-highest in the euro zone after Ireland’s 14.3%. As part of the bailout plan, Spain and Portugal also pledged deeper deficit reductions than previously planned.
All paper currencies are being “debased,” with the euro currency union at risk of being “dissolved,” Rogers said, adding that he continues to own the dollar, the Swiss franc, the Japanese yen and the euro.
“It’s a political currency and nobody is minding the economics behind the necessities to have a strong currency,” Rogers said. “I’m afraid it’s going to dissolve. They’re throwing more money at the problem and it’s going to make things worse down the road.”
Economic growth in the nations that share the euro will lag behind the U.S. by almost 1.5 percentage points next year, Bloomberg surveys of economists show.
Investors should instead buy precious metals including gold or currencies of countries that have large natural resources, Rogers said. Among other asset classes, he favors agricultural commodities as the best bet for the next decade as well as silver because prices haven’t rallied.
Speaking to Bloomberg on March 8, Rogers had suggested that bankruptcy for Greece would benefit the euro. "The Euro will shoot through the roof," he said adding that letting Greece fail" will show that EU are serious about fiscal responsibility."
Jim Rogers has taught finance at Columbia University’s business school and is a media commentator worldwide. He is the author of Adventure Capitalist, Investment Biker, Hot Commodities, A Gift to My Children, and A Bull in China. See his website.