Friday, October 10, 2008

On Wall Street: Let Them Hit Bottom, Let Them Go Bankrupt...

Legendary investor Jim Rogers warned during a CNBC interview this morning that global central banks are creating the environment for an inflationary holocaust by their ceaseless overprinting of currency, a measure that isn’t even successful in stabilizing the stock market.

Rogers said that the only solution to the market crisis was to let failing banks and speculators go bankrupt and stop pumping endless amounts of liquidity into the system, labeling it outrageous that responsible investors and taxpayers are being made to bail out crooks on Wall Street. “The way to solve this problem is to let people go bankrupt,” Rogers stressed, “All of this pumping money into the system is not going to save it - see what the market is saying, it’s saying we don’t buy that, let people go bankrupt...then you hit bottom and then you start over. The people who are sound will take over the assets from the people who aren’t sound and we'll start over. This is the way the world has worked for a few thousand years,” said Rogers.

Rogers warned that the reliance on governments printing money would not aid a recovery and would only lead to the problem becoming worse in the future. “We’re setting the stage for when we come out of this of a massive inflation holocaust,” he said.

Rogers said that excesses of credit and people becoming over-leveraged meant that they would now have to take some pain: “Never before in world history were people able to buy houses with no money down, many people bought four or five houses with no money down and no job and then they did it with cars and student loans and credit card loans, you just think we say well that’s too bad we’re gonna start over nobody loses his job….be realistic."

Rogers said that the G7 leaders, who are meeting this weekend, should “go down to the bar, have a beer and leave the rest of us alone, let the people who are sound succeed and let the other people fail. What I’m afraid of is they’re gonna keep doing what they’ve been doing - which the market hates, you can see the market hates it - because this is going to unleash rampant inflation around the world, rampant confusion in the currency markets and you’re gonna have currencies gyrating all over the world,” said Rogers, repeating that the central bankers were unleashing an “inflationary holocaust”.

A CNBC expert then expressed his confusion at Rogers’ argument that overprinting of currency caused hyper inflation, seemingly displaying less grasp of basic economic cause and effect principles than a 5-year-old would. Rogers again made the point: “When you print gigantic amounts of money and you flood the world with money, throughout history that has led to inflation.”

-Paul Joseph Watson, ("Rogers: Global Bankers Have Unleashed Inflationary Holocaust,", 10.10.08. Image: "Worthless,", 2008).


Anonymous said...

my problem with this guy rogers is that he seems to be sort of, well, an asshole.
castigating irresponsible borrowers is missing the point.
a lot of people who got sub-prime loans were fully qualified for regular rate loans.
sub-prime rates were the products the banks wanted to push. so they pushed 'em. and they repackaged 'em a bunch of different ways to generate even more income, no matter how bad that idea might seem in hindsight.
THAT'S the central problem with our economy: ALL we make is money. we don't have a stable, secure, diverse (ie; manufacturing as well as service and government), well-paid labor force, so to keep our consumption-based economy afloat, we have to let (hell, encourage!) people to live beyond their means.
it's all connected and that's what douchebags like this rogers guy don't get.
that said, i think his point about the bail-out being likely to spur inflation is spot on.
but until we have an honest discussion about our screwed up economy and capitalism itself, this sort of crap is all we can look forward to.

rubenh ( said...