The 2012 Outlook of Jim Rogers

by Lelde Smits Finance News Network      

Transcription of Finance News Network interview with American investor and author, Jim Rogers.

Lelde Smits: Hello I’m Lelde Smits for Australia’s Finance News Network and joining me today from Singapore is American investor and author, Jim Rogers. Jim, welcome to FNN and thanks so much for your time. Now for the benefit of our Australian audience, why did you choose to leave your homeland and set up in Singapore?

Jim Rogers: The main reason Lelde is that I’ve got two children who I want to grow up speaking perfect Mandarin. In my view the 21stcentury will be the century of China. I couldn’t keep up the Mandarin in New York, as much as I wanted to. You know, many parents do strange things for their children, they move near football coaches or music teachers or good schools. We moved to Singapore to maintain the Mandarin.

Lelde Smits: And why Singapore when you had all of Asia to choose from?

Jim Rogers: We looked at the Chinese speaking cities in China but the problem was the ones where we wanted to live are too polluted. I love Shanghai, I love Hong Kong, but the pollution is just too horrible. Singapore is the best of all worlds.

Lelde Smits: Well you’re clearly an investor with your eyes on global horizons, but what’s your outlook for global growth stepping into next year?

Jim Rogers: Well Lelde, I’m not too optimistic about what’s going to be happening in the world in the next two or three years, and maybe even longer. We have serious problems in the United States. You know, in 2002 we had an economic slowdown, 2008 was even worse because the debt was so much higher. The next time around the debt is going to be staggeringly higher. So, the problems are going to continue to get worse until somebody solves the basic underlying problem of too much spending and too much debt.

Lelde Smits: Could you elaborate on that Jim; If you believe problems are going to get worse because of too much spending and debt, what do you believe is the biggest risk to global growth in 2012?

Jim Rogers: Well definitely too much debt is, in a nutshell yes – I mean the biggest risk of course is the Central Bank in the US which keeps printing money. But they’re printing all that money as a result of the debt. So we have big problems of money printing, debt, too much consumption – be careful.

Lelde Smits: You recently returned from the States, how are folks there feeling about the economy?

Jim Rogers: I was surprised at how much optimism there is. Everybody still seems to think everything is still going to be OK. I guess they’ve been thinking that we’ve all been brought up that everything would be OK in next year or two, and it has been OK for the past 20 or 30 years. Unfortunately I think that’s false optimism and I would have been more impressed if I’d seen a lot of depressed people, but I see optimistic people.

Lelde Smits: So if everyone is optimistic, what concerns you about that state of American’s fiscal affairs?

Jim Rogers: Well the Central Bank, I mean the Central Bank controls monetary affairs but the Central Bank keeps buying government debt and the Congress keeps spending government money. So the combination of the Federal Government including the Central Bank, really scare me.

Lelde Smits: But if the Central Bank isn’t fixing things, who is responsible for fixing this dilemma?

Jim Rogers: Well first of all, you could either abolish the Central Bank or put somebody in there who wouldn’t print money, or the Congress could just stop spending money. Unfortunately Lelde that’s not the way politicians work. They just worry about the next election, they want to get through the next election and they hope they can make everything all right until after the next election. So it’s Congress in the end, it’s the President in the end, but are they going to do something – no. They’re not going to do anything until there’s a serious crisis or semi-crisis.

Lelde Smits: Well what’s holding them back then if we have the threat of an imminent crisis, as you say?

Jim Rogers: It would horribly painful to do what’s necessary. The problem Lelde is that the measures that America needs and not just America, many countries but especially America needs, would cause huge pain for a while. But, Lelde, if we don’t take our pain now and we wait until the market forces the pain on us, then it’s going to be you know a systemic collapse.

It’s going to be very, very serious pain; you’re going to see riots in the street. You’re going to see serious, serious problems, maybe perhaps war even. It’s better to go ahead and take the pain now, while it would be terrible for two or three or four years, at least we’d get it behind us and start over.

Lelde Smits: OK, so we need to take the pain and we all know the way out of debt isn’t more debt. So what’s printing money going to fix and why is this even an option?

Jim Rogers: Printing money does nothing more than bide time. Throughout history governments have tried to debase their currency in the hope that they would somehow get better down the road, but it’s always gotten out of control. The debt has gotten higher, the money printing makes people feel better for a while but in the end its higher inflation, higher interest rates and then you have serious, serious problems. Once inflation starts rising and gets out of control, it’s very hard to kill it. At this time we can still solve our problems, if you wait until inflation’s out of control then it’s very hard to solve your problems.

Lelde Smits: Turning to US politics now, and the US elections are coming up in November next year. Who are you endorsing Jim and why?

Jim Rogers: Well I don’t even want to get into who I’m endorsing and why because I mean after all, I’m just one voter and I would probably hurt somebody if I endorsed them. I mean in America, Gary Johnson and Ron Paul seem to understand the problems that are facing America. But I’m not in the business of endorsing political candidates – as far as I’m concerned Lelde, a pox on both of their houses.

Lelde Smits: Well if you won’t endorse a person, which policies do you favour?

Jim Rogers: Well, the only thing we can do is to cut spending with an axe – not with an axe, with a chainsaw. I mean we’ve got troops at over 100 countries around the world doing nothing but – the troops aren’t making enemies, but the presence of the American Military is making enemies. We’ve got to cut spending dramatically, we’ve got welfare programs; we’ve got entitlement programs in America that are just mind boggling. We really just have to take a chainsaw to spending of everything, across the board.

Lelde Smits: Obama just pulled troops out of Iraq, isn’t that a step in the right direction?

Jim Rogers: He pulled out most of the troops from Iraq; you know as usual, government propaganda is exactly that – government propaganda. There’re still a lot of contract people there that they’ve kept in Iraq, but yes that’s a step in the right direction. But again, we’ve had troops all over the world; it’s not doing us much good.

Lelde Smits: But Jim, can the budget be balanced by spending cuts alone. Shouldn’t policy makers also be looking at raising taxes?

Jim Rogers: Raising taxes doesn’t do any good Lelde, governments don’t create jobs. I mean have you ever seen a government create a new job? It’s people like your company that creates jobs. That’s the private sector where you create jobs. Taking money from the people who save and invest, and giving it to a bureaucrat, it’s going to give the bureaucrat a job and it’s going to give a few people jobs, but that’s not the way you solve the problems.

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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.

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