Reprinted from MoneyNews.com
Jim Rogers: ‘It’s Much Worse Than I Expected’
Friday, Feb. 1, 2008 10:58 a.m. EST
Superstar investor Jim Rogers is nothing if not consistent.
He still sees commodities and Chinese stocks soaring to the sky. And he still sees the U.S. economy and American stocks falling into the toilet. So he tells Fortune magazine.
"I’m extremely worried,” he said of the U.S. economy. "I have been for a while, but I just see things getting much worse this time around than I expected.”
Rogers thought the Fed already had gone too far in trimming the federal funds rate 75 basis points last week. Never mind the additional 50 basis points this week.
"Conceivably we could have just had recession, hard times, sliding dollar, inflation, etc., but I’m afraid it’s going to be much worse,” Rogers told Fortune.
"Bernanke is printing huge amounts of money. He’s out of control, and the Fed is out of control,” he said.
"We are probably going to have one of the worst recessions we’ve had since the Second World War. It’s not a good scene,” Rogers said.
Perhaps even a return of the dreaded 1970s-era stagflation.
For 20 years, Rogers, a co-founder of the hedge fund Quantum along with investment icon George Soros, has been singing the praise of China. He’s not changing his tune now.
The recent corrections in Chinese stocks are a positive development, Rogers maintains. Both the Shanghai and Hong Kong markets have dropped more than 20 percent from their highs.
"As I’ve said, if things hadn’t cooled off, the Chinese market was in danger of turning into a bubble,” Rogers says. "I find this most encouraging. The government’s been doing its best to cool things off.”
While he sees a bit more downside to the China market before it rebounds, Rogers is looking to eventually jump into booming sectors such as tourism, agriculture, power generation and airlines.
"Whether I buy this week or this month or this quarter, who knows,” Rogers says. "But I’m starting to think about buying new shares in China for the first time in a while.”
Rogers is an proponent, too, of the "de-coupling” theory – that American woes won’t undermine China.
"They won’t even know America’s in recession,” he says. "They won’t care if America falls off the face of the earth.”
His anticipation of recession in the U.S. also hasn’t dampened Rogers’ enthusiasm for commodities.
"Certainly some commodities are going to be affected,” he says. "But it’s not as if the markets haven’t figured this out.”
He believes that recent declines in the prices of metals like nick and zinc are harbingers of the U.S. recession that’s coming. But he’s not concerned. Growing world economies are going to keep buying, he says.
"Nickel is already down 50 percent. Other commodities may fall more. But I don’t see the economics of agriculture being much affected at all. Maybe there will be a few less cotton shirts bought. Maybe there will be a few less tires bought. But the supply is under more duress than the demand.”
http://moneynews.newsmax.com/money/archives/st/2008/2/1/105850.cfm?s=st