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Jim Rogers says US nearing downgrade, worse recession, 'because we're printing and spending money we don't have'
Source: BI-ME , Author: BI-ME staff
Posted: Tue June 14, 2011 7:16 pm

INTERNATIONAL. Legendary global investor and chairman of Singapore-based Rogers Holdings, Jim Rogers, said the US is approaching a financial crisis worse than 2008. 

As the government has already spent staggering amounts of money, when the problems arise next time, it cannot print that much more.

Speaking in an interview with India's ET Now, Rogers said he expected a downgrade of America's credit status. "America should already be downgraded. It should have been downgraded years ago. These people, the rating agencies, have got it wrong for 10-15 years now. America is bankrupt".

S&P said in April, the United States had until 2013 to come up with a credible plan for addressing its financial problems.

US government debt is currently 93% of gross domestic product compared with 60% before the financial crisis and is set to rise further in the next few years

"The US is the largest debtor nation in the history of the world," Rogers said.

"The debts are going through the roof. Would you keep lending money to somebody who's spending money and not doing anything about it? No you wouldn't," he suggested.

Asked about investment tips, Rogers said he is "long on commodities and long on currencies."

"I have sold short EM stocks and I have sold short technology stocks and I've sold short bonds in the US and I've sold short a large bank in the US," he noted.

“I actually own the dollar right now,” the contrarian investor confirmed in a recent radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt.

“I saw that 95% or 96% of people are bearish on the dollar, so I stepped in and bought,” he said.

The Chinese yuan is likely to be a “safe” currency, although it is difficult for investors to buy, Rogers told a conference in Edinburgh last month.

"The [US] economy is slowing down. We're going to have another recession in the US in late 2011 or 2012 or 2013 and it's going to be worse than the last time around, because America has shot all of its bullets, printing money and spending money we don't have. Be very careful," he told ET Now.

Rogers had already warned the next recession will be worse, speaking to CNBC, last week.

"The debts that are in this country are skyrocketing," he said, adding "in the last three years the government has spent staggering amounts of money and the Federal Reserve is taking on staggering amounts of debt."

"When the problems arise next time…what are they going to do? They can’t quadruple the debt again. They cannot print that much more money. It’s gonna be worse the next time around," Rogers predicted.
 
The renowned investor said he would love the world price of silver and gold to come down so he could "pick up the phone and buy more."

He also reiterated his view about Federal Reserve Chairman Ben Bernanke who has "never been right about anything" since he's been in Washington.

"He's been in Washington for 7-8 years. Please go back and do a study of his record. You will see that the man has never ever been right. Don't pay any attention to Bernanke, Rogers suggested in his ET Now interview.

Can he see QE3 coming?

"They're gonna bring it back because [Bernanke will] be terrified and Washington will be terrified," Rogers said. "There's an election coming in November 2012. Washington's gonna print more money."

However, it may come back under another name, he told CNBC.

Notes: Rogers has spent a career being one step ahead of mainstream investment thinking. Amongst his many accomplishments, Rogers was co-founder with George Soros of Quantum Fund. During his ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%.

Rogers retired from Quantum in 1980 and became a guest professor of finance at Columbia University Graduate School of Business and in 1989 and 1990, the moderator of The Dreyfus Roundtable and The Profit Motive with Jim Rogers.

Underscoring his convictions that future prosperity will come from China, Rogers' two young children speak Mandarin.

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