Jim Rogers is considered to be one of the investment world’s foremost minds having co-founded and managed the Quantum fund with George Soros, one of the most profitable and successful hedge funds of all time (beaten only by Bridgwater in the past few years).
At 74 years of age, Rogers has been through many different market environments, so even if he is not right on all of his calls, there is still reason to pay attention as his experience speaks volumes.
Jim Rogers: Prepare For The “Worst Economic Problems In Your Lifetime”
In his latest interview with Macrovoices.com, Rogers warns “the worst economic problems in your lifetime” are stalking the economy and he believes “a lot of people are going to disappear” when the next economic crisis begins to unfold.
What’s behind this dismal forecast, well Rogers believes that the last crisis was only just the beginning and next time around the crisis and subsequent shockwaves will be much much worse. He uses Bear Stearns and Lehman Bros as two examples of why no institution is immune to the upcoming financial catastrophe:
“In 2008 Bear Stearns disappeared, Bear Stearns had been around over 90 years. Lehman Brothers disappeared. Lehman Brothers had been around over 150 years. A long, long time, a long glorious history they’ve been through wars, depression, civil war they’ve been through everything and yet they disappear.”
Even though a deluge of new financial regulations have been introduced since 2008, debt levels around the world have exploded, and few of the problems that led to the 2008 crisis have actually been solved. As a result, Rogers believes “next time around it’s going to be worse than anything we’ve seen, and a lot of institutions, people, companies even countries, certainly governments and maybe even countries are going to disappear.” He goes on to state that it usually only takes a few bad events for the dominoes to start to fall, “when you start having bear markets as I’m sure you well know, one bad thing happens, and another bad thing happens, and these things snowball.” Even without the possible catalysts of global conflict or trade wars, bear markets emerge with unfailing regularity:
“Well bear markets do the same thing and so we have a lot of bad news on the horizon. I haven’t even gotten to war. I haven’t even gotten to trade war or anything like that but you know things do go wrong.”
Moving onto the topic of possible catalysts for the next bear market, Rogers goes on to state that a Trump-sponsored trade war could turn out to be the catalyst that starts the next global conflict. While Trump has “said he’s going to have a trade war with China, Mexico, Japan, Korea a few other people” as of yet no concrete trade barriers have been thrown up, in Mexico’s case quite literally. The lack of action taken on trade during his first few weeks in office has led Rogers to question whether Trump is just “another politician like all the rest of them.” He goes on to elaborate, “he says one thing and he doesn’t mean it at all, but he does have at least three people in high levels in his group who are very, very keen to have trade wars with China and other people.”
And if a trade war does start, Rogers’ outlook for the world is downright pessimistic:
“If he does that Eric, it’s all over. I mean history is very clear that trade wars always lead to problems, often to disaster, sometimes even to real war, a shooting war. So I don’t know, I’m not sure Mr. Trump knows.”
The smart money will have a chance to get out of the market before everything collapses. A trade war will send the dollar surging which may “turn into a bubble” at which point Rogers hopes he is, “smart enough to sell it because at some point the market forces are going to cause the dollar to come back down because people are going to realize, oh my gosh, this is causing a lot of turmoil, economic problems in the world and it’s damaging the American economy.”
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