Jim Rogers on China Opportunities, the Gold Standard and ...

[alvin]

Jim Rogers on China Opportunities, the Gold Standard and the Development of His Free-Market Financial Philosophy:

http://www.thedailybell.com/852/Jim-Rog ... rkets.html

[Dennis Ng]

Jim Rogers on China Opportunities, the Gold Standard and the Development of His Free-Market Financial Philosophy:

http://www.thedailybell.com/852/Jim-Rog ... rkets.html

Hi Alvin,
thanks for sharing this great interview.

Daily Bell: Can you explain the genesis of the financial crisis? How can it be solved?

Jim Rogers: In the past 20 years whenever people got into trouble in America, the central bank, Mr. Greenspan, came to the rescue. Thus, he refused to let the market work. The way the market is supposed to work fundamentally is people get in trouble, they lose money, they go bankrupt, and other people start redeveloping the assets. You know when companies went bankrupt in the 30s, they went through this purging and became great and successful companies.

But this time around Greenspan refused to let the market fundamentals work. He tried to save everybody. Immediately after he was appointed in 1987 there was the crash, an artificial crash, after which Greenspan flooded America and the world with money. The same thing happened with the Mexican crisis, the Orange County crisis, the Peabody crisis, I could go on and on. Mr. Greenspan would never let anyone fail, especially his friends. He kept flooding the world with money and debt and credit and of course more and more institutions built up bad assets, bad processes and nobody ever failed and incompetence was rewarded.

If he had let Long Term Capital Management fail in 1998, Lehman Brothers and other companies would still be in business, in my opinion. But he bailed everybody out. Incompetence was rewarded, moral hazard was exacerbated. Let people fail! The idea that you can solve a debt problem with more debt and more consumption defies comprehension. The US is the largest debtor nation in the history of the world – and that's what you inevitably end up with. Look at the numbers. The US cannot ever pay off the debt and the sooner the country restructures realistically, the better. Otherwise what lies ahead is several centuries of decline like other countries – like Portugal, a country that used to be rich and successful.