Friday, September 23, 2011

[Video] Jim Rogers Talks to CNBC About the Current Dire Straits

Sometimes Jim Rogers gets repetative since he usually pounds the same theories - which is not bad from the viewpoint he has a long term outlook, but in this interview with CNBC yesterday there are some interesting items regarding his current positions (currently long dollar even though he does not believe it to be a safe haven), and some trade / currency tensions developing.  I must have missed the news about Brazilian import tariff on Chinese goods.

For those newer to trading I think his view on the dollar is important to understand from a lesson standpoint.  Even if you the dollar is 'cooked' long term, time frame is important.  For the near term, the U.S. dollar still is considered a safe haven (best house on a street full of crack homes) and in panic people flee to U.S. Treasuries and the dollar.  So while Jim believes U.S. leadership (I use that word loosely) is constantly doing damage to its currency, he understands the way the other people in the market will react and will take advantage of it.  (Rogers is a huge long term bear on the currency)

8 minute video - email readers will need to come to site to view

  • The U.S. dollar is going higher “against major currencies,” well-known investor Jim Rogers told CNBC Thursday. The dollar "is going up against everything right now” for a number of reasons, said Rogers. One may be that everybody is panicking "and for some reason they’re rushing into the U.S. dollar.”  “The U.S. dollar is not a safe haven, if you ask me, but I do own it,” he added. 
  • Also, Rogers noted he would own the U.S. dollar, or the Swiss Franc, or agriculture. “Agriculture prices [are] getting banged right now. I am kind of planning on buying Swiss francs, more dollars and agriculture.” 
  • In addition, he weighed in on China’s economy, saying, “They’re doing their best to cool things off … I expect them to continue to do it, and that is causing more slowdown around the world.” 
  • But “the major problems are coming from the west," Roger stressed. “They are coming from Europe and the [United States]. We are much worse off than we were in 2008 because the debt has gone through the roof.”  “At least in 2008 there was the possibility that the governments could bail us out. Now, of course, the governments have gotten deep, deep, deep into debt themselves,” he added. “Everybody is in much worse shape.” 
  • Plus, there are all sorts of trade tensions and currency tension developing, Rogers went on to say. “Brazil  is sort of ignited a trade war [by putting a 30 percent import tariff on China and Korea ]. And right now China is trying to get the Europeans to let them open up the trade with China more. The Europeans are saying no, so China is saying, 'No, we won’t bail you out.'"
  • “I hope the trade war doesn’t break out" because throughout history when it does it has "caused depressions,” Rogers added. “You saw what happened in the 1930s. It led to depression and it also led to war. So I hope it can be contained.” 
  • Ben Bernanke's idea that low-interest rates are good, "is killing the people who save and invest, and that's really hurting a very, very large part of the population," concluded Rogers. (something we've said countless times)  [Mar 31, 2010: Ben Bernanke Content to Sacrifice Savers to Recapitalize Banks and Benefit Debtors]

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