Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers, said the US is approaching a financial crisis worse than 2008.
As the government has already spent staggering amounts of money, when the problems arise next time, it cannot print that much more.
Speaking in an interview with India’s ET Now, Rogers said he expected a downgrade of America’s credit status. "America should already be downgraded. It should have been downgraded years ago. These people, the rating agencies, have got it wrong for 10-15 years now. America is bankrupt".
S&P said in April, the United States had until 2013 to come up with a credible plan for addressing its financial problems.
US government debt is currently 93% of gross domestic product compared with 60% before the financial crisis and is set to rise further in the next few years
"The US is the largest debtor nation in the history of the world," Rogers said.
"The debts are going through the roof. Would you keep lending money to somebody who’s spending money and not doing anything about it? No you wouldn’t," he suggested.
Asked about investment tips, Rogers said he is "long on commodities and long on currencies."
"I have sold short EM stocks and I have sold short technology stocks and I’ve sold short bonds in the US and I’ve sold short a large bank in the US," he noted.
“I actually own the dollar right now,” the contrarian investor confirmed in a recent radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.
“I saw that 95% or 96% of people are bearish on the dollar, so I stepped in and bought,” he said.
The Chinese yuan is likely to be a “safe” currency, although it is difficult for investors to buy, Rogers told a conference in Edinburgh last month.
"The [US] economy is slowing down. We’re going to have another recession in the US in late 2011 or 2012 or 2013 and it’s going to be worse than the last time around, because America has shot all of its bullets, printing money and spending money we don’t have. Be very careful," he told ET Now.
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.