Thursday, November 20, 2008

Jim Rogers on FT.com

Jim Rogers joins FT.com for their "View from the Markets" interview series.

The famed Singapore-based investor discusses a number of timely issues with the FT's John Authers, so let's have a quick overview of this video interview.

On the dollar: Rogers does not deny the current strength of the dollar rally, and says he will use the interim strength to unload his remaining dollar-based assets. Still, he feels that the policies of Bernanke and Paulson will ensure the US dollar's eventual demise.

Recession: Jim feels that the current recession will be the worst since World War II, a point on which he and Nouriel Roubini seem to agree. However, unlike Roubini, Rogers feels that the policies and stimulus packages enacted by politicians and central bankers around the world will only lengthen and prolong the recession.

Commodities - bull or bear?: Forced selling of all assets has contributed to the sharp decline in commodities. Also, demand for commodities has suffered as the world slumps into a global recession. Despite these factors, Rogers sees a sound fundamental case for commodities over the longer term, and notes that commodities were first to rebound in previous recession and depressions.

China: Rogers is unrepentant for holding on to his Chinese shares and not selling as the stock market plunged in 2008. In fact, he has bought more shares in recent months. He offers, "selling China in 2008 would be like selling America in 1908". It might be a great short-term timing move, but in the long term it would seem rather silly.

Regulators' failings: According to Rogers, most of our current problems are rooted in the failings of regulators and central bank officials who encouraged moral hazard with easy money policies and a string of financial firm bailouts. We have not allowed business failures to occur in recent years, and this has prevented the economic system from cleaning itself out.

Lots more to hear in this interview. If you take one thing away from this interview, I hope it is an understanding of the futility of governments' attempts to turn back the economic tides.

As Rogers has repeatedly noted, most government interventions into the economy will only serve to worsen and prolong recessions and depressions, and lead to further problems down the road.

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