Print Money, Spend It, Get Re-Elected

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The Economic Times

     

Jim Rogers, Chairman, Rogers Holdings, in an interview with ET Now, speaks about the global markets and Indian economy with a special reference to rupee. Excerpts:

ET Now: Let me first start with the very basic question. How do you view the current situation in Europe given the fact that how Spanish bond yields of late have expanded and it is evident that austerity versus growth in the near term, it is growth which is clearly moving around?

Jim Rogers: No, nobody in the West is managing their problems with their austerity problems very well. Just look at the numbers, every single one of those has higher and higher debt. Even Greece which theoretically wrote off a lot of debt, the debt is going higher. This probably has not been solved. This problem is being pushed down the road. It is going to come back and it is going to come back worst next time around. Be very careful.

ET Now: So would you say that the markets are more news driven than reacting to fundamentals currently?

Jim Rogers: The news has an affect for maybe an hour, a day or so, maybe even a week but no, markets basically always are reacting to the fundamentals. There is noise in the markets partly because of so much of news on TV these days but no, in the end even in the medium term, markets rely to fundamentals, not on the short term news.

ET Now: So how would you look at 2012 in terms of growth? Would you say that liquidity stimulus in countries is the main reason why economic data of late has been strong but the real concerns are far from over?

Jim Rogers: No, of course central banks around the world have been printing staggering amounts of money over the past 4 years. So, no, all of this is out of issue. It is based on huge amounts of money that are being printed and huge amounts of money which are being spent. There are 40 elections around the world this year and all of those politicians want to be re-elected. Some of them are big countries, France, America. We have some big countries with big elections and next year the Germans will have elections. So you are going to see a lot of money being spent, a lot of good news for the people who get that money. For the rest, the situation continues to deteriorate.

ET Now: In the emerging markets, where do you see a faster and more sustainable growth number coming in, which region?

Jim Rogers: The faster the numbers that will be better in economies which are well managed and which have commodities because commodities are in a bull market. Indonesia is doing much better this decade than they did in the 1990s because there was a commodity bear market in those days. Australia is going to do better than Belgium. Canada is going to do better than the United States. So you look for well managed countries which have a lot of commodities and you will probably make a huge amount of money. I am not putting money in the Congo which has a lot of commodities because this is not well managed. I would look at well managed commodity countries.

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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.

© 2012 The Economic Times

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