Does Jim Rogers read this blog? ;-)
Interesting comments from legendary investor Jim Rogers in a BusinessWeek interview.
Rogers shares my fear — stated previously on this blog — that Obama doesn’t understand economics and is foolishly trusting the people who got us into this mess and are wedded to saving the status quo ante (and can only think in terms of saving the institutions rather than saving the economy… a mindset Willem Buiter terms “cognitive regulatory capture”) to deliver us from their self-created mess:
They’re making [the crisis] worse. It’s pretty embarrassing for President Obama, who doesn’t seem to have a clue what’s going on — which would make sense from his background. And he has hired people who are part of the problem.
Rogers also agrees the bailout should focus on helping the real economy and putting money into healthy banks, rather than pouring money into sick banks:
These are people who think the only solution is to save their friends on Wall Street rather than to save 300 million Americans… I’d like to see them let these people go bankrupt, let the bankrupt go bankrupt, stop bailing them out.
He wants AIG, Citigroup, bankrupt car companies, and everyone else to go through bankruptcy. He rails against bailouts because they subsidize and encourage unwarranted risk-taking:
If Long-Term Capital Management had been allowed to fail, Lehman and the rest of them would’ve lost a huge amount of money… [But] Instead of losing capital, losing assets, and losing incompetent people, they hired more incompetent people.
He’s mad at corporate executives who profited while they steered their companies toward bankruptcy:
How many hundreds of millions of dollars did [Chuck] Prince take out of [Citigroup]? How many hundreds of millions of dollars did other Citibank execs take? …[Stan O'Neal] got $150 million for leaving, even though he ruined [Merrill Lynch].
And he predicts chaos:
We’re going to have social unrest in much of the world. America won’t be immune.
Posted by James on Sunday, March 01, 2009