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Rogers: Greece is bust and the sooner we accept it the better

June 17th, 2011

Jim Rogers, the plain-speaking, Singapore-based investor, always talks sense about the debt blindness that continues to afflict the West. In this interview on CNN Money, Rogers tells Poppy Harlow:

“Greece is bankrupt and the sooner we recognise that and do something about it the better … Eventually we’re going to have to bite the bullet and some bondholders are going to have to lose a lot of money. It’s not the end of the world. It’s losses, but it’s not the end of the world.

Asked if this is Europe’s “Lehman moment”, Rogers, who is the author of bestsellers including Investment Biker, and is a former colleague of George Soros on the Quantum fund, says:

“There’s no way Greece can pay off all those debts. Even with all their austerity plans, the debts still continue to rise. They rise at a slower rate, but the debt goes up.

“Pushing the can down the road is not going to work. Somebody’s going to have to take some losses … but that’s good, you take the losses, you reorganize, and you start over from a sound base. Then people make a lot of money.

Rogers — who in December 2010 said Britain is “totally insolvent” — said that America is the most indebted nation on earth but is doing nothing to reduce its indebtedness, which he says is insane. On CNN Money he accuses Ben Bernanke of being an utter failure as chairman of the US Federal Reserve.

“Sitting around denying reality is not going to solve the problem … We’ve had 30 or 40 years of ignoring reality … I know we’re going to have continued unpleasantness in the US, I know it’s going to get worse some time in the next couple of years, whether it’s called a depression is irrelevant. Things are not going to be great, until we deal with this staggering debt problem.

“The idea that you solve a problem of too much debt and too much consumption with more debt and more consumption is insane.

“The solution is to stop spending so much money. We’re the largest debtor nation in the history of the world, we’re spending over $1 trillion a year more than we have; this can’t go on. I don’t like saying it, I’m an American taxpayer like you, but we’ve got to stop.

This reminded me of the interview Rogers gave me in December 2008 for the first edition of QFINANCE.  Speaking at the time Rogers said he believed that one of biggest errors made by Bernanke’s predecessor as Fed chairman, Alan Greenspan, was to orchestrate a rescue of the failed hedge fund Long Term Capital Management.

Rogers said he believed that, if Greenspan had allowed LTCM to fail, the crisis of 2008 might well have been averted. Rescuing the guys at LTCM from the consequences of their own folly gave carte blanche to the incompetents at Bear Stearns and Lehmans to carry on as if nothing had changed.

“Instead of licking their wounds and learning how to drive cabs, they went off looking for the next fish to fry.”

Short URL: http://www.ianfraser.org/?p=4247

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