Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers expects the US to lose its AAA credit rating after Standard & Poor’s revised its outlook on US sovereign debt to "negative" from "stable".
S&P said last week the United States had until 2013 to come up with a credible plan for addressing its financial problems.
Speaking to Investment Week, Rogers said: Eventually it will happen. Not this month, or this quarter, but it is certainly going to happen.
The US is the largest indebted nation in the history of the world and the debt is going higher and higher," Rogers added.
A new report from Deutsche Bank ranks the US government as the world’s fourth riskiest sovereign borrower, behind Greece, Ireland and Portugal, and just ahead of Italy.
"Because the US has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said in a statement.
"More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said S&P credit analyst Nikola G. Swann.
The government is printing money to solve this problem and I cannot imagine lending money to the US government for 30 years in US dollars at 3%, 4%, 5% or 6% interest, as the government will never be able to pay off those debts, Rogers told Investment Week.
Speaking to India’s Economic Times (ET), the renowned investor reiterated he was poised to sell short US treasury bonds.
"I have no position in US treasury bonds. I am waiting to sell them short," Rogers said.
"I plan to sell short US government bonds sometime in the next few weeks, months. Interest rates all over the world are going to go higher. We have inflation, staggering debt problems and currency problems facing us. So interest rates are going to go higher," he added.
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.