Is The US’s Economic Strength On A Permanent Decline?
Jim Rogers thinks the US has lost its title as the world’s economic engine. He thinks the subprime mess will last for years, Bernanke doesn’t know anything about the economy and should resign, the US dollar is on a permanent decline and China will become the world’s foremost economic power.
Everyone is recognizing the weakness of the US economy and Federal Reserves lack of interest in a strong dollar. Realizing that the dollar is going to continue its free fall, everyone from super-models to rappers are dissing the dollar. Even OPEC wants oil priced in a non-US dollar based currency, which it called “a worthless piece of paper”.
Don’t say I didn’t warn you! Its still not too late to buy gold and replace your dollar-based assets with foreign currencies.
Here’s an interesting article from England’s Standard newspaper:
If you found this post helpful, consider donating to my coffee fund!Six more hard years tipped for subprime fallout
Benjamin Scent
Monday, November 19, 2007
The US subprime crisis will continue for years to come and America may be facing a permanent decline as an economic power, famed investment guru Jim Rogers said over the weekend.
“The situation is going to continue to deteriorate,” he said in Hong Kong.
“When you have a bubble, it normally takes years to work out all the ramifications.”
The subprime crisis is not over, Rogers said.
“I think we have a long way to go before it’s finished,” he said later at a conference. “When you have a bubble like this, it usually takes five to six years to clean it up.”
Rogers said not many people have lost their houses yet despite a credit bubble that allowed Americans to buy a house with no down payment – a situation unprecedented in US history.
But he said many will lose their homes before the crisis is over.
“Inflation’s going to get much worse. You are going to have more people losing money. You’re going to have more bankruptcies,” he said.
On top of his dire prognosis, Rogers said he does not see anything that could be done to save the day.
But, he said, any steps the US authorities take to try and stop a recession will not help the economy anyway.
“Let it happen,” he said. “There are these bad elements in the economy that need to be cleaned out.”
Rogers said that America’s position as an economic power may be starting a permanent decline.
“The United States has certainly peaked,” he said.
“America, in [my daughter's] lifetime, will certainly be a shadow of its former self.” Rogers has one daughter, Happy, who is four.
China will be the “next great country in the world,” following Britain’s economic dominance in the 19th century and the United States after that.
He said of the ramifications of a devalued dollar: “You’ve got to figure out ways to protect yourselves. It’s going to change, the world as we know it.”
The dollar’s decline is getting “very bad,” he said.
He predicts many countries are going to stop using the US dollar.
In response to reports that Gulf countries, including the United Arab Emirates, are pondering dropping their currencies’ pegs to the US dollar, he noted some countries had already done so and expects more to follow suit.
“In 20 years, very few [countries] will have their reserves in US dollars – very few,” Rogers said. “You have to be nuts to buy US dollars in the twenty-first century.”
Rogers also called on US Federal Reserve chairman Ben Bernanke to resign for devaluing the greenback.
“All he knows about is printing money, and he’s doing it,” Rogers said. “He doesn’t know about the value of the dollar; he doesn’t care about the value of the dollar.”
The bow-tied investment sage, who helped launch the Quantum Fund with George Soros, said the yuan could replace the US dollar as the world’s reserve currency in 15 years, after it becomes fully convertible.
“I don’t suspect the euro’s going to last 15 to 20 years from now,” Rogers said.
“The yen will never be able to replace the dollar.”
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November 21st, 2007 at 7:26 am
It’s so funny to me that the same people crying about the falling dollar are in awe of the strength of China. It’s like they completely forget that China has (and continues to) purposely devalued their currency for years.
November 21st, 2007 at 11:25 pm
it can’t last. look at japan. they’ve been tryin to weaken their currency for years. its broken 110 and looks like it’ll get even stronger.
November 28th, 2007 at 12:10 pm
It is a really funny observation and seems like more of fluff rather than stuff. Roger has not provided a single economic reason for his observations. I dont understand if all Americans go bankrupt where will China get its 10% growth rate from? I think both the countries are intertwined and devaluation of Dollar is normal economics as a result of pumping liquidity and reducing interest rates.
You can either have growth and inflation or slowing economy and no inflation, how can Mr Roger predict that US economy will slow down and there will be huge inflation too?
Incidently his former partner Mr Soros is loading up on Countrywide’s shares. Go Figure.
November 28th, 2007 at 4:50 pm
well, its not without precedent.
In the 70s the US had whats called stagflation.
stagflation is when you have a recession and stagnant economic growth accompanied by inflation.
as for Soros by countrywide, its either a rumor or he’s growing senile! As for senile, Icahn tried to buy WCI at 22. right now its under 10. Kerkorian also tried turning around GM, so I guess there are a lot of investors who’re past they’re prime.