Why Jim Rogers Hates Investing In India
Here’s an excerpt from a recent interview with Jim Rogers on why he prefers investing in China over India.
High oil prices, inflation, food prices etc have hit countries like India very hard. How should counties like India tackle the situation?
• Inflation affects everyone. Not just India. We pay the same price for copper. Copper price is the same in Australia, Germany and the US and India. India is not getting any worse than other countries. Except for the fact that the Indian government spends periodically more money in controlling inflation. The problem with India is that your politicians are worse than American politicians. You know Indian politicians believe and argue that the cause for inflation is commodities trading. How absurd is that.Recently India banned Futures trading in some commodities like rice, wheat, rubber, potato etc to control price rise and inflation.
• It is the same tactic that politicians have done for hundreds of years everywhere in the world. Politicians would blame for anything wrong on three groups of people. They blame financiers/financial types. They blame foreigners: It is always good to blame foreigners. And they blame the Press. They blame you guys for commodity inflation in India. If the Press is not writing about inflation, we would not have a problem, politicians would say. It is absolutely insanity.India banned Futures trading in some commodities without any logic or reasoning and study. And it has not done anything good for commodities in India or in the rest of the world. The commodity prices are still up and up. India needs to understand that there is no easy solution to high prices. As prices go up, people use less of anything and people would continue to produce more and that has always been there in the boom market. I read that India produces lots of foodgrains and do not have storage facilities and tonnes of rice and wheat are destroyed in public sector storage facilities.
How sad it is. It is terrible thing to happen. So let India do things to protect commodities rather than ban Futures trading in them. By banning commodities in boom market, the Indian government is making things worse. Look at China. The Chinese instituted price controls. Price controls have been around for thousands of years. They always make things worse. If you tell somebody that rice is only Rs 2, you have no other ways.
If you tell a farmer that you can sell rice only for Rs 2, he will tell I am not going to produce any more rice. Farming is hard work. I cannot make any money with price controls by producing and selling rice for Rs 2. So then you have less rice and shortage of rice. Even Romans had price controls, it never worked. So the Indian government is making things worse for India. It has been making things worse for the people in the last 50 or 60 years.
Some politicians in India blame commodity Futures trading as the reason for price rise; inflation is a big political issue in India.
•By banning commodity Futures, food prices would not go down. Because people sell in any prices they want to in Futures. So banning Futures is a senseless decision. In commodities market, we know what the price of wheat is. There is a public price for wheat according to demand and supply world over. So India banning Futures does not have any effect on wheat market. Indian government instead of being transparent and serious is creating lots of black market by banning Futures trading. It is going to make lots of people desperate. Politicians have been doing the same thing for many years, all over the world. Not just in India. It is worst for all of us.What is the reason for the global food crisis now?
• The number of hectares of global wheat farming has declined over the years. The inventories of food are in the lowers ebb now in the last 50-60 years. In the last 30 years, farming has been in a terrible state. There is a terrible shortage of farmers now across the world. Young people do not go for farming. They study computers and get jobs. All the farmers in the world are old now. They are all men. Young people do not go to farms these days because farming is a hard physical job.Seeds, fertilizers, tractors…there is a shortage for these stuff. We have a shortage of even tractor tyres now. That is the reason why we have shortage of food and there is a food crisis. It is not again speculators who have created the food shortage. Speculators take delivery of wheat. They don’t hoard wheat; it is the government that is hoarding wheat. It is the governments that are making the prices higher. Argentina says you cannot export wheat. A lot of counties say you cannot export wheat. The governments should call farmers to produce more and invite more people to farming by offering incentives.
When farming is coming down, governments like in India are trying to introduce price control mechanisms and bring down prices, and ban Futures. So things are getting worse. Things will be bad if it goes like this way. The food crisis will get worse, if countries act like this way. There will come a time when people will not get enough food. They are going to starve. The world is going through several weather problems. There will be droughts. So things are getting worse for farmers. I promise politicians who rule us are not going to go to the fields and cultivate. Do you think your politicians will go to the fields and work hard till evening to raise more rice? No way.
US President George Bush recently commented that it is the large population in countries like India and China that are causing the food shortage and crisis.
• I don’t agree. Look how things are blown out of proportion by politicians. Why can’t the people in Asia eat and live happily? Is it the prerogative of the US that only they should eat? There are three billion people in Asia. Thirty yeas ago Mao Tse-Tung was still running China. Thirty years ago Indira Gandhi was running India. Vietnam was destroyed.Now there are three billion people in Asia, working hard, saving and investing. They want to eat more and they should. There is nothing wrong in that. Why should the developed world say that you should not eat? That is discrimination. I hope Asia continues to consume more so that their standards of living would go higher. All the western politicians who say that Asia should not eat more, let them go to the fields and work hard and produce more wheat, rice and maize so that food prices do not go higher.
Do you think India and China are driving the global commodities prices?
• Not just India and China. Most countries are driving the global commodities prices. America consumes lots of sugar, wheat and petrol. Europe does, everybody does. If America stops using petrol, there will be lots of petrol available in the world. If Europe stops eating wheat, there will be lots of wheat available. So what I want to say is that everyone is driving the global commodities prices. Everyone in the world is driving the demand for everything.Which is the commodity you are most bullish on these days? Gold or Crude Oil?
• I am not particularly bullish on a commodity. I am in fact bullish on all commodities. I am not a good market timer. I am a very good or a very bad sure time trader. So I have no idea. I own all the commodities. I go to commodities based on historic fundamentals.You recently said that it is the right time to invest in agri-commodities. Is there great investing opportunities in agri-commodities?
• I have bought into agri-commodities recently. I am an admirer of agri-commodities, and I hope there are great investing opportunities there. I make plenty of mistakes. But I try to buy commodities cheap. And agri-commodities are cheap and thus hold great investing potential.What do you think of Indian stock market? Is it overheated and overpriced?
• It was certainly overheated, and that is why it has come down crashing recently. I am not a good judge of the Indian stock markets. Sometimes I get the Indian stock markets exactly right. Sometimes I get it exactly wrong. So I am not a good judge. So, I would not buy Indian stocks because it is too high. And your government continues to do stupid things like don’t trade in commodities. So if I am a foreigner I cannot invest in Indian commodities. It is sad. Vietnam recently said all the problems is because of importing gold. So don’t import gold. So Vietnamese cannot import gold.Most astonishing thing. So governments keep doing these kinds of things. Vietnam said their problems are because people have been buying gold. Come on, how crazy can you go? Don’t worry; politicians can go crazy at any lengths. You know America said there were weapons of mass destruction in Iraq. There were not. They spent hundreds of thousands of billions and killed tens of thousands of people to find those weapons. So politicians do a lot of crazy things.
Among the three emerging nations, Russia, India and China, which one would you rate first as an investment destination?
• China, of course.Why not India? Can you compare China with India?
• Indians have the worst bureaucracy in the world. India learned bureaucracy from the British. Indian bureaucracy has remained stagnant. Just stagnant. They do what they think only. There is no proper education, no infrastructure in India. It is the most wonderful country in the world. I admire India’s diversity. I tell my friends, if you can only visit one country in your life time, go to India. India is an amazing country.But as a place for investment? Oh, no, I would think twice. Even Indians who have been doing great business elsewhere in the world, and when they go back to India to do business, it has not been a good experience for them. Many of them get out of the business and go back to other countries to do business.
You have driven through India?
• I have driven through India a couple of times extensively. In 1988 and 2001. It was spectacular; it was wonderful. I loved it. I love traveling across any place. You learn a lot about that place while traveling. The highway from Kolkata to Mumbai should be one of the greatest highways in the world. But the Indian infrastructure development is so bad, that it took seven days for me to cover Mumbai and Kolkata highway. But everyday in India was an adventure, which I loved. Yes, it is a great place to travel. But if you looking for efficiency and investment, it is not the right place yet.So it is better to go to China?
• Yeah, in China, a truck driver travels 70 km an hour average. China has the best roads in the world. On the Mumbai-Kolkata road, a truck driver goes 20 km an hour. That shows the efficiency between the nations. To cross state boarders in India, it is a nightmare. In China, it is all great. In China, they do what they say. In India, the government says lots of things, and they do not do it. Yes, smart Indians make lots of money. There are several success stories in India. India has the most beautiful women in the world, but has the worst politicians and bureaucrats.
If you haven’t read his latest book, A Bull In China, I strongly recommend it.
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August 26th, 2008 at 11:21 am
Great interview.
Just goes to show, government always gets in the way of progress. The less government intervention in the economy, the better off the country. Imagine NO government intervention? The sky would be the limit as far as progress goes.
August 31st, 2008 at 5:32 pm
He’s wrong about one thing – inventories are not on the ebb. For that matter, lack of farmers doesn’t affect world food production, since much of it is commercial farming anyway. Which then makes me question the accuracy of the rest of the interview…
January 4th, 2009 at 1:39 am
Hey Kevin, RIGHT…just imagine “NO government intervention..and the sky would be the limit as far as progress goes”. Yep, it sure would..and Madoff could have then stole 5 trillion instead of only 50 Billion, and Ken Lay and Enron could have racked up 5 trillion in fraudlent misrepresentation instead of only billions in conjuction with the crooks in investment banking, analysts, big law firms, public accounting firms and the corporate management who all actively aided and abbetted the massive fraud so they could all get their piece of the pie in excessive fees, insider stock sales, etc. And the list goes on and on year after year, decade after decade from World Com, to Internet bubble frauds and misrepresentation, to old junk bond scandal, to current sub-prime mortgage crisis, etc. How did the current financial crisis begin? By fraudlent and unethical writing of sub-prime mortgages with no-basis in reality. Why..so mortgage initators could cash out their high fees without regard to any value to the misrepresented asset or ability of borrower to repay. Then banks and jump in and resell supposedly low risk assets, rated by rating agencies as low risk, to dumb unprotected investors all over the world as great assets. Why do banks or rating agencies care…they got their fees and dollars up front and off load fraudlent assets to others. Of course the Fed/taxpayer is their to “bail them out” from their greed and massive fraud….. so these elite crooks get to start all over again on the next cycle of massive fraud and theft of 99% of the populations weath. Yep, it sure is “the sky’s the limit as far as progess goes”…at least as far as the elite 1% of these crooks go…they now get another chance to do it all over again in the next 5-10 years.
The point is the crooks … ie the financial elite … are always angling to “steal” every penny they can from the other 99% of the population and they really don’t much care how they do it. Please give me a break, the senior managment of public corporations pay themselves billions of dollars in compensation and justify it saying but we earned it by “superior performance”. What a joke. Given that the stock market has now wiped out all so-called performance over the last 6 years with effectively ZERO return over that time period…does that mean that the public corporate management is now going to give us shareholders BACK the billions of dollars in fraudlent compensation they took. Of course not….it is always a one-way street.
The difference is…yes the government makes lots of mistakes, has waste, fraud, and inefficency, etc. A $250 million wasted bridge to nowhere is is a tragedy. But at least there is continual scrutiny and the overall effort is generally in the directon of attemping to improve the overall condition of the country. Misguided and inefficent as it is much of the time, and hampered as it is by political vested interest, lobbying, self-serving politcs., etc. It is just a least worst alternative…not that it is very good. It certainly could and should be much better.
However, when one compares the government alternative to the alternative of the “financial elite” who have caused many many trillions of dollars in losses on multiple different occasions over the last decades.. from the current housing/credit fraud, to internet bubble frauds, to massive company fauds(Enron, WorldCom, etc), to the junk bond frauds, etc. one has to seriously ask WHY WOULD ANYONE ADVOCATE TRUSTING THESE elite corporate crooks to act in anyone’s best interest except themselves. They have proven many many times over a long period of time that they act to enrich themselves at everyone else’s expense regardless of how crooked or outrageous their schemes are. It simply is not possible to foster these repeated massive scams without the active participation of the the financial elite from public company senior management, analysts, rating agencies, investment banks, large law firms, and even large public accouting firms.
One can make the arguement that this is not true of all the large scale private sector and to some degree that is true. There are the Warren Buffets of Berkshire, Bill Gates of Microsoft, and Andy Groves of Intel for example that by and large have run fairly clean operations for many years and overall benefitted themselves, society, consumers, employees, stockholders etc. But that is not to say that they have not pulled some marginal stuff as well such as anti-competitive tricks, favorable deals not available to others, “insider trading”, etc. It’s just that they are overall just much better and somewhat more ethical than the run of the mill corporate crook ( ie. the majority of them).
So in conclusion…you will never convice me that “unregulated capitalism ie. no government intervention” will ever be a reasonable model. The financial elite has repeatedly PROVED for many decades now that they will steal, misrepresent, lie, or do virtually anything to get as much as they can despite the consequences to anyone else. As a famous philospher stated “absolute power, corrupts absolutely”..likewise absolute greed, corrupts absolutely…which is exactly what the US corporate and financial elite has so aptly demonstrated over the past decades.
January 27th, 2009 at 7:23 am
think a higly literate man like Jim Rogers should not make such ignorant comments. He could be easily challeged on his comments about the future prospects of India.
I feel extremely offended being Indian and would like to point out that India is the world’s largest democracy, a land where culture resides side by side. Every country has its strenghts and weaknesses, it is not that political involvement and bribes only exists in India, but it also exists in the western countries, the current scandal of House of Lords being investigated for offering their service for making amendments to the legislation.
India has the the strenght to fight back any economic glooms and has proved even after 100 years of British suppression with the Indian treasury drained can still rise to become one of the fastest growing economies in the world with a growth rate of 9% i n 2007.
If it wasn’t for India, trade would have been quite difficult around the globe, being the producer of many commodities as well as offering cheap services to biggest brands around the world.
So what is Jim Rogers really talking about, I could continue this conversation with him and question his flase claims.
July 2nd, 2009 at 11:04 pm
He’s wrong about one thing – inventories are not on the ebb. For that matter, lack of farmers doesn’t affect world food production, since much of it is commercial farming anyway. Which then makes me question the accuracy of the rest of the interview…
“lack of farmers doesn’t affect world food production”
Then who will do farming, apart from farmers.I have been fallowing the farming world for the past few years, due to lack of farmers most of the farming lands are left as grazing grounds.
The per acre yield in cash crops such as rubber are desparately low and after 2014 most of the production areas ,specifically in south India wont be cultivable, and farmers moving to other jobs are incresing in huge percentage
“wake up we will be sitting with money, but without food”(sounds funny).
“please read about agriculture in mexico to know how this happens”