by Don Miller Money Morning
If legendary investor Jim Rogers is right, not only is Recession 2013 unavoidable, it’s going to be a doozy.
In recent interviews, Rogers has been predicting a 2013 recession, bowled over by a potential blowout in Europe and unsustainable spending by the U.S. government.
"Be very worried about 2013 and be very worried about 2014, because that’s when the next slowdown comes," Rogers told Reuters.
And while Rogers sees no true safe havens out there, a few investments can provide some comfort specifically, commodities in the form of agriculture, gold, and silver.
Rogers’ statements usually get lots of attention, mainly because he has an uncanny tendency to be right.
Together with George Soros, he founded the Quantum Fund in the 1970s and posted returns of 4,200% over 10 years. Rogers retired in 1980 at the age of 37, but remains active as a private investor.
Back in 1999, Rogers recommended gold when it was trading at $252 and silver at $4.
We all know what happened after that.
Here’s the Jim Rogers take on the economy and how to survive Recession 2013.
Elections Will End Good Times
Rogers sees the coming elections as the end of a joy ride for both Europe and the United States.
"President Obama wants to get reelected. German Chancellor Angela Merkel wants to get reelected," Rogers said. That means they’ll both be spending lots of public money to keep voters happy until the elections are over.
The ECB’s controversial decision to purchase unlimited quantities of bonds from struggling Eurozone members indicates Merkel is ready to pull out all the stops to save the euro and her job.
In fact, Merkel has made a sharp about face and now wants to stop Athens from leaving the Eurozone at all costs.
"For [Merkel], it is essential to avoid the consequences of a Grexit before national elections next year," influential German news magazine Der Spiegel said recently.
But the EU rescue will "absolutely not" work, Rogers says. He expects the Greeks to be the first to exit the EU.
What’s more, Greece will be merely the first domino to fall.
"You have got countries that are essentially bankrupt. The solution to too much debt is not more. I suspect that the euro will not survive," he said.
Eventually the entire EU may be restructured with a core group of countries like Finland, the Netherlands, and Austria joining Germany and perhaps France in a new monetary union.
Debt to Bring Recession 2013
Meanwhile, Rogers doesn’t think it matters much who wins the U.S. elections.
The crushing amount of debt that has piled up will soon put an end to the feeble economic recovery and bring on Recession 2013.
"We had a recession in 2002, and it was worse in 2007-08 because the debt was so much higher," Rogers said.
"Next time is going to be a whole lot worse because the amount of debt is staggering," he added. "We’ve shot our bullets. What more can they do…quadruple the debt again?"
U.S. sovereign debt has skyrocketed since the global financial crisis began in 2008 andrecently sped past the $16 trillion mark. The deficit for fiscal 2012 is expected to reach $1.6 trillion, up ten-fold from 2007.
On Sept. 13, the Federal Reserve announced yet another round of fiscal spending to stimulate the economy. Although investors cheered the news, a new set of Fed programs will add even more debt to the pile.
In order to break the pattern the U.S. needs to cut spending and taxes "with a chainsaw," Rogers said.
Jim Rogers: Commodities to Rule
A tripling of the Fed’s balance sheet won’t be the only damage to the U.S. economy, according to Rogers.
Fed money printing will eventually set off a firestorm of consumer price inflation that will crush the U.S. dollar.
"I’m very pessimistic about the U.S. dollar" over the long-term, Rogers said. "It’s going the way of pound sterling when it lost its status as the world’s reserve currency."
Rogers said he’s betting onforeign currencies, gold,silverand agricultural commodities as the winners for the remainder of the decade.
For currencies, he likes the Japanese yen and the Chinese renminbi.
He prefers the white metal over gold right now because silver prices are about 40% below their highs, while gold prices are 10% or 15% below all-time highs.
"But I’m not selling any gold. If it goes down I hope I’m smart enough to buy more. If it goes down a lot I hope I’m smart enough to buy a lot," Rogers said.
Reprinted with permission from Money Morning.
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.