Why Jim Rogers is buying what everyone else is selling

Market Watch ^ | June 26,2015 | Michael Sincere

[Hojczyk]

Rogers: What is happening right now is a historical anomaly. Never in the thousands of years of recorded history have we had interest rates at zero or negative. We are destroying the people who save and invest for the future. They are being wiped out at the expense of the people who bought four or five houses with no money down and no job. We are destroying the people that all societies throughout history have needed the most.

When you destroy the investing and saving group, your society, economy, and country has problems.

What about Greece?

Greece is a sideshow that could turn into the main show because politicians keep making mistakes. What is best for Greece is to declare bankruptcy, stay in the euro, and start over. They will never be able to pay their debts. We’ve had states, cities, and counties go bankrupt, and they didn’t leave the U.S. They reorganized and started over. If Greece went bankrupt but stayed in the euro EURUSD, +0.0000% , we’d have a bit of a trauma but we’d move on. If they make Greece leave, it would turn into the main show.

Any final thoughts?

In 2008, we had a problem because debt was piled so high, but now the worldwide debt is much higher than it was then. In the U.S., the Fed’s balance sheet has gone up five or six times. Worldwide, all of these countries are talking about austerity, but they continue to run up higher and higher debt. Unfortunately, the world doesn’t have the luxury to lower interest rates much more. To pump up the stock market, all they can use is printed money. The next time around will be pretty horrible for all of us. I hope that you, your readers, and I survive.

[GOPJ]

Russia, China... stuff that’s cheap...

[ChildOfThe60s]

Governments may be especially vulnerable to a sovereign debt crisis when they rely on financing through short-term bonds

The Clinton Administration's much ballyhooed "surplus" was basically attributable to two things. One was the accounting trick of essentially applying SS funds into the general budget.

The other was selling a higher proportion of US debt in short term bonds which carried lower interest rates, thus lowering the cost of servicing the debt. Thereby making the "accounts payable" of the US government lower.

Although longer term bonds carry higher interest rates, they have the distinct advantage of fixing borrowing costs for a longer period, providing some protection from rising interest rates and enable to plan for a more stable budget over the longer term.

The Clinton approach meant that as soon as interest rates went up the illusion of a surplus would disappear. Hopefully when someone else was in office.

[DHerion]

Wait, Greece declares bankruptcy, and gets to stay in the Euro? Jim is nuts. Italy, Ireland, Portugal and Spain would immediately follow Greece. What happens to the Euro then?

The only way to save the Euro, if that’s what they want, is to kick Greece out. The pain the Greeks will experience over the next couple years might scare Italy, Portugal, Spain and Ireland into getting their economic house in order, rather than follow Greece down the toilet.