Jim Rogers Forecasts US Collapse
Guest post. This commentary was written by an outside contributor in November 2011 and reflects the author's views at that time, not those of StockMarketWatch. It is preserved for the historical record only and is not investment advice.
Commodities king Jim Rogers takes a definitive stand on the outlook for the US economy, and it’s not good.
Speaking with Rupert Murdoch’s Fox Business, Rogers Holdings Chairman Jim Rogers said, “Every 4-6 years throughout history we’ve had an economic slowdown in the United States, so we’re overdue.”
“We still have serious problems throughout the world. The U.S. is in fact in worse shape than Europe,” he added. “Europe is getting the press these days because the debts are coming due but America is the largest debtor nation in the history of the world.”
In fact, given a US budget deficit slated for at least $1.6 trillion for fiscal 2012, Rogers’ outlook implies an apocalyptic scenario for global markets, a scenario forwarded by the gold bugs—who’ve been, so far, spot on for so long with their message about gold’s historical role as money of last resort.
As Europe fails, again, to issue €3 billion of EFSF bonds, Greece 1-year yields reach 200 percent, and Italy experiences a blowout to a 6.6 percent yield for the 10-year, the US dollar creeps up against the euro, but drops like a stone against gold.
Traders and sovereign wealth fund managers appear to see things the same way as Rogers about the prospects of the US dollar going into 2012. He said, if it can be imagined (nonagenarians, those 90 to 99 years old, remember), a worse downturn than 2008.
“The next time we have an economic slowdown it will be terrible,” he said. “I would expect it to be around 2012 or 2013.”
Rogers added, “The next slowdown is going to be worse than in 2008, which was worse than in 2002.”
Anyone who follows Rogers closely knows one thing: he rarely sticks his neck out with precise targets, low-balling or high-balling his assessments with caution when asked for a timeline or price targets for gold, stocks, or anything, for that matter. Typically, Rogers skirts the handicapping game with his pocket response, “I don’t know; I’m the world’s worst trader, __________ (add interviewer’s first name here).”
So when Rogers puts a time of 2012 or 2013, he most likely means 2012, leaving another year as a buffer for the Fed’s inability to hide negative GDP growth any further.
Moreover, given Bernanke’s lowered forecast for US GDP (under 3 percent) following the latest FOMC meeting last week, investors can be assured the US economy is, indeed, tanking.
And if tip-toeing around the issue of denying the realization of a continuation of the US ‘Depression’ is not your cup of tea, and you’ve given up on Martin Feldstein’s National Bureau of Economic Research (NBER) cave-ins to political pressure, start following leading economics forecasting firm Economic Cycle Research Institute (ECRI), whose statement posted on its website in September didn’t mince words about the future of the US economy.
Co-founder & COO of the Economic Cycle Research Institute (ECRI), Lakshman Achuthan, posted on its website: “Early last week, ECRI notified clients that the U.S. economy is indeed tipping into a new recession. And there’s nothing that policy makers can do to head it off.” (emphasis added).
Central banks have been net buyers of gold and net sellers of US Treasuries this year. Gold continues to reassert itself as the ultimate reserve currency, trading higher against the dollar on Monday as Europe reaches new crisis highs.