The worst market crisis in 60 yearsBy George Soros
Published: January 22 2008 19:57 Last updated: January 22 2008 19:57
The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.
However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.
Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.
Video: George Soros at DavosThe financier speaks to Chrystia Freeland, the FT’s US managing editorEvery time the credit expansion ran into trouble the financial authorities intervened, injecting liquidity and finding other ways to stimulate the economy. That created a system of asymmetric incentives also known as moral hazard, which encouraged ever greater credit expansion. The system was so successful that people came to believe in what former US president Ronald Reagan called the magic of the marketplace and I call market fundamentalism.
Fundamentalists believe that markets tend towards equilibrium and the common interest is best served by allowing participants to pursue their self-interest. It is an obvious misconception, because it was the intervention of the authorities that prevented financial markets from breaking down, not the markets themselves. Nevertheless, market fundamentalism emerged as the dominant ideology in the 1980s, when financial markets started to become globalised and the US started to run a current account deficit.
Globalisation allowed the US to suck up the savings of the rest of the world and consume more than it produced. The US current account deficit reached 6.2 per cent of gross national product in 2006. The financial markets encouraged consumers to borrow by introducing ever more sophisticated instruments and more generous terms. The authorities aided and abetted the process by intervening whenever the global financial system was at risk. Since 1980, regulations have been progressively relaxed until they have practically disappeared.
The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility.
Everything that could go wrong did. What started with subprime mortgages spread to all collateralised debt obligations, endangered municipal and mortgage insurance and reinsurance companies and threatened to unravel the multi-trillion-dollar credit default swap market.
Investment banks’ commitments to leveraged buyouts became liabilities. Market-neutral hedge funds turned out not to be market-neutral and had to be unwound. The asset-backed commercial paper market came to a standstill and the special investment vehicles set up by banks to get mortgages off their balance sheets could no longer get outside financing. The final blow came when interbank lending, which is at the heart of the financial system, was disrupted because banks had to husband their resources and could not trust their counterparties. The central banks had to inject an unprecedented amount of money and extend credit on an unprecedented range of securities to a broader range of institutions than ever before. That made the crisis more severe than any since the second world war.
Credit expansion must now be followed by a period of contraction, because some of the new credit instruments and practices are unsound and unsustainable. The ability of the financial authorities to stimulate the economy is constrained by the unwillingness of the rest of the world to accumulate additional dollar reserves. Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end.
Although a recession in the developed world is now more or less inevitable, China, India and some of the oil-producing countries are in a very strong countertrend. So, the current financial crisis is less likely to cause a global recession than a radical realignment of the global economy, with a relative decline of the US and the rise of China and other countries in the developing world.
The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse.
The writer is chairman of Soros Fund Management
http://www.ft.com/cms/s/0/24f73610-c91e-11dc-9807-000077b07658.html?nclick_check=1
Tuesday, January 22, 2008
Sunday, January 13, 2008
Rogers Says U.S. to Have Worst Recession `in a While'
Rogers Says U.S. to Have Worst Recession `in a While'
By Saijel Kishan and Mark Barton
Jan. 7 (Bloomberg) -- The U.S. economy is heading for a recession that will be the worst ``in a while'' and investors should sell the dollar as global currencies weaken, investor Jim Rogers said.
``It's going to be one of the worst recessions we've had in a while because we had so many excesses going into it,'' Rogers, chairman of New York-based Rogers Holdings, said in a Bloomberg Television interview today from Singapore. ``It's going to be bad for all of us as currencies come under more and more stress and we have more inflation in the world.''
The U.S. and U.K. governments have been ``lying'' about inflation, Rogers said, adding that he's has been selling their respective currencies.
The dollar dropped for a second straight year in 2007, falling 8.3 percent on a trade-weighted basis as the collapse of the U.S. subprime-mortgage market prompted the Federal Reserve to cut interest rates three times. Rising energy and food prices have pushed up inflation in the U.S. and Europe.
``I hope by the end of this year all of my assets will be out of the U.S. dollar,'' Rogers said. ``The dollar is a currency that's terribly flawed and it's going to be under duress for many years to come.''
Rogers said in a Nov. 15 interview that investors should sell the dollar and that he expects to be rid of all his U.S. currency assets this year. He reiterated today that he's also buying the Chinese yuan and the Swiss franc as other currencies weaken.
Agricultural Commodities
Rogers, whose commodities index has more than quadrupled since 1998 when it was started, said that agriculture may be the best investment among commodities in the event of a world recession.
``If you're worried about a recession, you might think about buying agricultural commodities,'' Rogers said. ``I suspect agriculture is going to do well no matter what happens to the world economy.''
A decline in crop yields because of droughts from Ukraine to Australia, combined with rising demand for biofuels, has spurred a rally in agricultural commodities that sent wheat to a record last month and corn and soybeans to multi-year highs.
Cotton, coffee and sugar may gain the most, he said, adding that he wouldn't buy crude oil after prices rose above $100 a barrel last week, or industrial metals such as tin or lead because a slowing U.S. economy would curb demand.
Commodities are in their seventh year of gains because of a lack of investment in production capacity and rising demand from expanding economies in Asia. They have also gained as the U.S. dollar fell, making resources such as oil and wheat, which are denominated in the U.S. currency, cheaper for foreign buyers.
Rogers said commodities will gain even if the dollar declines, because of supply shortages.
``All commodities are going to be in much shorter supply for another decade,'' he said. ``So even if the dollar goes up, commodities are going to go higher.''
To contact the reporters on this story: Mark Barton in London at barton1@bloomberg.net ; Saijel Kishan in London at skishan@bloomberg.net
Last Updated: January 7, 2008 12:55 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayq29JCsf65c&refer=home
By Saijel Kishan and Mark Barton
Jan. 7 (Bloomberg) -- The U.S. economy is heading for a recession that will be the worst ``in a while'' and investors should sell the dollar as global currencies weaken, investor Jim Rogers said.
``It's going to be one of the worst recessions we've had in a while because we had so many excesses going into it,'' Rogers, chairman of New York-based Rogers Holdings, said in a Bloomberg Television interview today from Singapore. ``It's going to be bad for all of us as currencies come under more and more stress and we have more inflation in the world.''
The U.S. and U.K. governments have been ``lying'' about inflation, Rogers said, adding that he's has been selling their respective currencies.
The dollar dropped for a second straight year in 2007, falling 8.3 percent on a trade-weighted basis as the collapse of the U.S. subprime-mortgage market prompted the Federal Reserve to cut interest rates three times. Rising energy and food prices have pushed up inflation in the U.S. and Europe.
``I hope by the end of this year all of my assets will be out of the U.S. dollar,'' Rogers said. ``The dollar is a currency that's terribly flawed and it's going to be under duress for many years to come.''
Rogers said in a Nov. 15 interview that investors should sell the dollar and that he expects to be rid of all his U.S. currency assets this year. He reiterated today that he's also buying the Chinese yuan and the Swiss franc as other currencies weaken.
Agricultural Commodities
Rogers, whose commodities index has more than quadrupled since 1998 when it was started, said that agriculture may be the best investment among commodities in the event of a world recession.
``If you're worried about a recession, you might think about buying agricultural commodities,'' Rogers said. ``I suspect agriculture is going to do well no matter what happens to the world economy.''
A decline in crop yields because of droughts from Ukraine to Australia, combined with rising demand for biofuels, has spurred a rally in agricultural commodities that sent wheat to a record last month and corn and soybeans to multi-year highs.
Cotton, coffee and sugar may gain the most, he said, adding that he wouldn't buy crude oil after prices rose above $100 a barrel last week, or industrial metals such as tin or lead because a slowing U.S. economy would curb demand.
Commodities are in their seventh year of gains because of a lack of investment in production capacity and rising demand from expanding economies in Asia. They have also gained as the U.S. dollar fell, making resources such as oil and wheat, which are denominated in the U.S. currency, cheaper for foreign buyers.
Rogers said commodities will gain even if the dollar declines, because of supply shortages.
``All commodities are going to be in much shorter supply for another decade,'' he said. ``So even if the dollar goes up, commodities are going to go higher.''
To contact the reporters on this story: Mark Barton in London at barton1@bloomberg.net ; Saijel Kishan in London at skishan@bloomberg.net
Last Updated: January 7, 2008 12:55 EST
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayq29JCsf65c&refer=home
Wednesday, November 21, 2007
Investor Jim Rogers says the buck stops here
Investor Jim Rogers says the buck stops here
Mon Nov 12, 2007 5:00am EST
By Tom Miles
HONG KONG (Reuters) - The U.S. dollar is sinking fast and investors wanting to stay afloat should clamber into a raft of commodities and benefit from the rising tide of China's economic boom, investment guru Jim Rogers said on Monday.
"I'm hoping to get all my assets out of U.S. dollars in the next few weeks or months," he told reporters in Hong Kong via a video link from Singapore. "But that will include going into commodities because that is a way out of U.S. dollars."
Rogers, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s, said the U.S. economy was already in recession, or soon would be, and the U.S. dollar would continue to have problems for years to come.
But that would not be enough to dent demand from Asia.
"Asia's now becoming its own entity. Asia is growing on its own. If you look around Asia you'll see that they're much more independent of the United States and will continue to get more independent."
Driving this bull market would be 3 billion people -- in China, India, Pakistan and Vietnam -- whose economies were at a subsistence level during the last commodities boom.
"Now, look around you. Everybody in Asia wants to live the way we live in America," said Rogers, who was launching Barclays' (BARC.L: Quote, Profile, Research) Global Commodities Delta Fund, which tracks his Rogers International Commodity Index (.RICIX: Quote, Profile, Research), in Hong Kong.
He said he'd recently been buying agricultural commodities, which he favored over metals such as tin (MSN3: Quote, Profile, Research) and lead (MPB3: Quote, Profile, Research), which were close to all-time highs.
"I think there are great opportunities in agriculture ... like sugar, which is something like 80 percent below it's all-time high, or cotton." he said.
OIL DOUBLES, CHINA BUBBLES
Another long-term winner will be crude oil because, he said, demand continues to grow but new supplies are scarce.
"Over the course of the bull market, oil has to go to $150, it has to go to $200, because nobody's been discovering oil."
But Rogers, who described himself as the world's worst short-term trader, said all big rallies suffered occasional setbacks on the way up and he wasn't making any short-term forecasts about the oil price.
And bear markets catch support on the way down, which he said might give the dollar a few footholds as it falls.
"Everyone's extremely pessimistic about the dollar, so we're bound to have a rally soon," said Rogers.
But longer-term, the picture was clear and the best currencies to buy would be the Swiss franc, Japanese yen and Chinese yuan. He said the Chinese government should make the yuan fully convertible as soon as possible.
"I would certainly suspect by 2010, if not by the Olympics next year," he said. "It's causing bubbles within the Chinese economy. It's causing inflation within China."
But he had little love for the Hong Kong dollar, which he said should disappear as soon as the yuan becomes convertible.
"If I were the Hong Kong government, I would abolish the Hong Kong dollar. There's no reason for the Hong Kong dollar. It's a historical anomaly."
(Editing by Anne Marie Roantree)
http://www.reuters.com/article/ousiv/idUSHKG9614920071112?sp=true
Mon Nov 12, 2007 5:00am EST
By Tom Miles
HONG KONG (Reuters) - The U.S. dollar is sinking fast and investors wanting to stay afloat should clamber into a raft of commodities and benefit from the rising tide of China's economic boom, investment guru Jim Rogers said on Monday.
"I'm hoping to get all my assets out of U.S. dollars in the next few weeks or months," he told reporters in Hong Kong via a video link from Singapore. "But that will include going into commodities because that is a way out of U.S. dollars."
Rogers, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s, said the U.S. economy was already in recession, or soon would be, and the U.S. dollar would continue to have problems for years to come.
But that would not be enough to dent demand from Asia.
"Asia's now becoming its own entity. Asia is growing on its own. If you look around Asia you'll see that they're much more independent of the United States and will continue to get more independent."
Driving this bull market would be 3 billion people -- in China, India, Pakistan and Vietnam -- whose economies were at a subsistence level during the last commodities boom.
"Now, look around you. Everybody in Asia wants to live the way we live in America," said Rogers, who was launching Barclays' (BARC.L: Quote, Profile, Research) Global Commodities Delta Fund, which tracks his Rogers International Commodity Index (.RICIX: Quote, Profile, Research), in Hong Kong.
He said he'd recently been buying agricultural commodities, which he favored over metals such as tin (MSN3: Quote, Profile, Research) and lead (MPB3: Quote, Profile, Research), which were close to all-time highs.
"I think there are great opportunities in agriculture ... like sugar, which is something like 80 percent below it's all-time high, or cotton." he said.
OIL DOUBLES, CHINA BUBBLES
Another long-term winner will be crude oil because, he said, demand continues to grow but new supplies are scarce.
"Over the course of the bull market, oil has to go to $150, it has to go to $200, because nobody's been discovering oil."
But Rogers, who described himself as the world's worst short-term trader, said all big rallies suffered occasional setbacks on the way up and he wasn't making any short-term forecasts about the oil price.
And bear markets catch support on the way down, which he said might give the dollar a few footholds as it falls.
"Everyone's extremely pessimistic about the dollar, so we're bound to have a rally soon," said Rogers.
But longer-term, the picture was clear and the best currencies to buy would be the Swiss franc, Japanese yen and Chinese yuan. He said the Chinese government should make the yuan fully convertible as soon as possible.
"I would certainly suspect by 2010, if not by the Olympics next year," he said. "It's causing bubbles within the Chinese economy. It's causing inflation within China."
But he had little love for the Hong Kong dollar, which he said should disappear as soon as the yuan becomes convertible.
"If I were the Hong Kong government, I would abolish the Hong Kong dollar. There's no reason for the Hong Kong dollar. It's a historical anomaly."
(Editing by Anne Marie Roantree)
http://www.reuters.com/article/ousiv/idUSHKG9614920071112?sp=true
Freddie, Fannie Shares Will Continue to Slide, Jim Rogers Says
Freddie, Fannie Shares Will Continue to Slide, Jim Rogers Says
By Jeff Kearns and Brian Sullivan
Nov. 20 (Bloomberg) -- Freddie Mac, which today dropped the most ever after posting a record loss, and rival mortgage lender Fannie Mae will continue to tumble because of bad home loans, investor Jim Rogers said.
``I'm still short those companies, they both have a long way to go as far as I'm concerned,'' Rogers said in an interview. ``Neither one has a clue what's on their balance sheets.''
Freddie Mac, the second-largest U.S. mortgage company, warned of a possible cut in the dividend and the need for additional capital. The worst housing slump in 16 years caused ``significant deterioration'' in the third quarter that will continue through year-end, Freddie Mac said after reporting a net loss of $2.02 billion, or $3.29 a share, three times what some analysts estimated.
Fannie Mae spokesman Brian Faith declined to comment on Rogers. Freddie Mac spokesman Michael Cosgrove didn't immediately respond to a request for comment.
Rogers, chairman of New York-based Beeland Interests Inc., also said he is still shorting shares of investment banks and Citigroup Inc., the largest U.S. bank by assets.
``There are huge numbers of writedowns still coming,'' Rogers said.
Rogers, who predicted the start of the global commodities rally in 1999, advised in a Nov. 5 interview with Bloomberg that investors should avoid financial stocks. In March 2006, he said Fannie Mae shares would decline.
Financial stocks in the Standard & Poor's 500 Index have tumbled 22 percent this year, the most among 10 industries. The index fell 2.9 percent to 384.50, the lowest since October 2005, as of 1:13 p.m. in New York.
Rogers co-founded the Quantum Hedge Fund with George Soros in the 1970s. He traveled the world by motorcycle and car in the 1990s researching investment ideas for his books, which include ``Adventure Capitalist'' and ``Hot Commodities.''
To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net ; Brian Sullivan in New York at bsullivan@bloomberg.net . Last Updated: November 20, 2007 13:21 EST
http://www.bloomberg.com/apps/news?pid=20601213&refer=home&sid=a2udgQaBPhYc
By Jeff Kearns and Brian Sullivan
Nov. 20 (Bloomberg) -- Freddie Mac, which today dropped the most ever after posting a record loss, and rival mortgage lender Fannie Mae will continue to tumble because of bad home loans, investor Jim Rogers said.
``I'm still short those companies, they both have a long way to go as far as I'm concerned,'' Rogers said in an interview. ``Neither one has a clue what's on their balance sheets.''
Freddie Mac, the second-largest U.S. mortgage company, warned of a possible cut in the dividend and the need for additional capital. The worst housing slump in 16 years caused ``significant deterioration'' in the third quarter that will continue through year-end, Freddie Mac said after reporting a net loss of $2.02 billion, or $3.29 a share, three times what some analysts estimated.
Fannie Mae spokesman Brian Faith declined to comment on Rogers. Freddie Mac spokesman Michael Cosgrove didn't immediately respond to a request for comment.
Rogers, chairman of New York-based Beeland Interests Inc., also said he is still shorting shares of investment banks and Citigroup Inc., the largest U.S. bank by assets.
``There are huge numbers of writedowns still coming,'' Rogers said.
Rogers, who predicted the start of the global commodities rally in 1999, advised in a Nov. 5 interview with Bloomberg that investors should avoid financial stocks. In March 2006, he said Fannie Mae shares would decline.
Financial stocks in the Standard & Poor's 500 Index have tumbled 22 percent this year, the most among 10 industries. The index fell 2.9 percent to 384.50, the lowest since October 2005, as of 1:13 p.m. in New York.
Rogers co-founded the Quantum Hedge Fund with George Soros in the 1970s. He traveled the world by motorcycle and car in the 1990s researching investment ideas for his books, which include ``Adventure Capitalist'' and ``Hot Commodities.''
To contact the reporters on this story: Jeff Kearns in New York at jkearns3@bloomberg.net ; Brian Sullivan in New York at bsullivan@bloomberg.net . Last Updated: November 20, 2007 13:21 EST
http://www.bloomberg.com/apps/news?pid=20601213&refer=home&sid=a2udgQaBPhYc
Jim Rogers Urges People to Sell U.S. Dollar Holdings (Update1)
Jim Rogers Urges People to Sell U.S. Dollar Holdings (Update1)
By Aaron Pan and Paul Gordon
Nov. 15 (Bloomberg) -- Investor Jim Rogers urged people to get out of the dollar and says he expects to be rid of all his U.S. currency assets by summer next year.
``If you have dollars, I urge you to get out,'' Rogers said in an interview from Singapore. He is chairman of New York-based Rogers Holdings, formerly known as Beeland Interests Inc. ``That's not a currency to own.''
The dollar fell 9.5 percent this year against a basket of six major currencies as a housing slump slowed the economy and losses stemming from subprime mortgage defaults spread among U.S. banks. Rogers, who said last month he was shifting out of all his dollar assets, plans to buy commodities, Japan's yen, the Chinese yuan and the Swiss franc.
Interest rate futures traded on the Chicago Board of Trade show a 72 percent chance that the central bank will lower its target rate for overnight loans between banks to 4.25 percent on Dec. 11, its third reduction this year.
Rogers, who predicted the start of the global commodities rally in 1999, criticized Federal Reserve Chairman Ben S. Bernanke for comments on the currency before a congressional committee on Nov. 8.
``He is a total fool,'' Rogers said. ``He said Americans who buy only American goods are not affected if the value of the U.S. dollar goes down. I was terrified.''
Bernanke said the only effect of a weaker dollar on a typical American with their wealth in dollars, buying consumer goods in dollars, would be ``their buying powers, it makes imported goods more expensive.''
Rogers said that's not right.
``If you only buy American products and the dollar goes down, the price of oil goes up, copper goes up, wheat goes up,'' he said. ``That affects you. He doesn't understand the economy as far as I can see.''
To contact the reporter on this story: Aaron Pan in Hong Kong at Apan8@bloomberg.net . Last Updated: November 15, 2007 01:15 EST
http://www.bloomberg.com/apps/news?pid=20601103&sid=aXH9wCx1oydw&refer=us
mms://media2.bloomberg.com/cache/vTCeJnFDJFO0.asf
By Aaron Pan and Paul Gordon
Nov. 15 (Bloomberg) -- Investor Jim Rogers urged people to get out of the dollar and says he expects to be rid of all his U.S. currency assets by summer next year.
``If you have dollars, I urge you to get out,'' Rogers said in an interview from Singapore. He is chairman of New York-based Rogers Holdings, formerly known as Beeland Interests Inc. ``That's not a currency to own.''
The dollar fell 9.5 percent this year against a basket of six major currencies as a housing slump slowed the economy and losses stemming from subprime mortgage defaults spread among U.S. banks. Rogers, who said last month he was shifting out of all his dollar assets, plans to buy commodities, Japan's yen, the Chinese yuan and the Swiss franc.
Interest rate futures traded on the Chicago Board of Trade show a 72 percent chance that the central bank will lower its target rate for overnight loans between banks to 4.25 percent on Dec. 11, its third reduction this year.
Rogers, who predicted the start of the global commodities rally in 1999, criticized Federal Reserve Chairman Ben S. Bernanke for comments on the currency before a congressional committee on Nov. 8.
``He is a total fool,'' Rogers said. ``He said Americans who buy only American goods are not affected if the value of the U.S. dollar goes down. I was terrified.''
Bernanke said the only effect of a weaker dollar on a typical American with their wealth in dollars, buying consumer goods in dollars, would be ``their buying powers, it makes imported goods more expensive.''
Rogers said that's not right.
``If you only buy American products and the dollar goes down, the price of oil goes up, copper goes up, wheat goes up,'' he said. ``That affects you. He doesn't understand the economy as far as I can see.''
To contact the reporter on this story: Aaron Pan in Hong Kong at Apan8@bloomberg.net . Last Updated: November 15, 2007 01:15 EST
http://www.bloomberg.com/apps/news?pid=20601103&sid=aXH9wCx1oydw&refer=us
mms://media2.bloomberg.com/cache/vTCeJnFDJFO0.asf
Rogers May Move Assets Out of U.S. Dollars in Weeks (Update2)
Rogers May Move Assets Out of U.S. Dollars in Weeks (Update2)
By Bei Hu
Nov. 12 (Bloomberg) -- Investor Jim Rogers said he may sell all U.S. dollar-denominated assets as early as in the coming weeks in favor of agricultural commodities.
``I'm hoping to move all of my assets out of U.S. dollars in the next few weeks or months,'' the 65-year-old chairman of Beeland Interests Inc. told reporters in Hong Kong through a video link today from Singapore to mark the launch of a Barclays Plc fund targeting Hong Kong individuals and based on the Rogers International Commodity Index -- Total Index.
Demand not matched by increases in supply makes commodities ``one of the best places to be if you want to get out of the U.S. dollars,'' Rogers said, who predicted the start of the global commodities rally in 1999.
He particularly favors agricultural commodities such as sugar and cotton, which are trading below their historical highs, he said.
Agricultural products are rising because of increasing demand for food and biofuel as crude oil soars to a record. Crude traded at a record $98.62 last week in New York. Wheat traded on the Chicago Board of Trade reached a record $9.6175 a bushel on Sept. 28. Still, sugar has fallen 15 percent this year in New York as rising production in India pushes down prices.
Long Way Down
Rogers said the U.S. economy may already be in recession and no stock market around the world is attractive at the moment.
``Shares still have a long way down to go over the next two or three years, at least according to my estimation,'' he said.
Declines in equities could drag down commodities prices, thought depleting reserves will over the long term support resources prices, he said. Historical commodity booms lasted 15 years to 23 years, meaning the current rally may continue through 2014 to 2022, barring major setbacks such as Avian influenza, or bird-flu, pandemic, Rogers said.
Oil will hit $150 or $200 in the course of the commodity bull market because no one has discovered a major oilfield for over 40 years, Rogers said.
The Rogers commodities index, tracking more than 30 commodities including energy, metals and agricultural products, has surged more than 300 percent since its inception in 1998, said Wendy Kwan, Barclays Capital's director of investor solutions.
Hong Kong Dollar
Rogers said Hong Kong would be able to improve the efficiency and profitability of trade with mainland China should it abolish its local currency and adopt the yuan once the mainland Chinese currency becomes fully convertible.
``You have a gigantic neighbor who's becoming the most incredible economy in the world,'' Rogers said. ``It'd be like having a special currency for Mississippi when the rest of the U.S. uses the U.S. dollar.''
He said he wouldn't be surprised if the yuan becomes fully convertible by the time Beijing hosts the Olympics next year or the 2010 Shanghai World Expo.
To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net .
Last Updated: November 12, 2007 05:27 EST
http://www.bloomberg.com/apps/news?pid=20601213&sid=at_rv3aCT._4&refer=home
By Bei Hu
Nov. 12 (Bloomberg) -- Investor Jim Rogers said he may sell all U.S. dollar-denominated assets as early as in the coming weeks in favor of agricultural commodities.
``I'm hoping to move all of my assets out of U.S. dollars in the next few weeks or months,'' the 65-year-old chairman of Beeland Interests Inc. told reporters in Hong Kong through a video link today from Singapore to mark the launch of a Barclays Plc fund targeting Hong Kong individuals and based on the Rogers International Commodity Index -- Total Index.
Demand not matched by increases in supply makes commodities ``one of the best places to be if you want to get out of the U.S. dollars,'' Rogers said, who predicted the start of the global commodities rally in 1999.
He particularly favors agricultural commodities such as sugar and cotton, which are trading below their historical highs, he said.
Agricultural products are rising because of increasing demand for food and biofuel as crude oil soars to a record. Crude traded at a record $98.62 last week in New York. Wheat traded on the Chicago Board of Trade reached a record $9.6175 a bushel on Sept. 28. Still, sugar has fallen 15 percent this year in New York as rising production in India pushes down prices.
Long Way Down
Rogers said the U.S. economy may already be in recession and no stock market around the world is attractive at the moment.
``Shares still have a long way down to go over the next two or three years, at least according to my estimation,'' he said.
Declines in equities could drag down commodities prices, thought depleting reserves will over the long term support resources prices, he said. Historical commodity booms lasted 15 years to 23 years, meaning the current rally may continue through 2014 to 2022, barring major setbacks such as Avian influenza, or bird-flu, pandemic, Rogers said.
Oil will hit $150 or $200 in the course of the commodity bull market because no one has discovered a major oilfield for over 40 years, Rogers said.
The Rogers commodities index, tracking more than 30 commodities including energy, metals and agricultural products, has surged more than 300 percent since its inception in 1998, said Wendy Kwan, Barclays Capital's director of investor solutions.
Hong Kong Dollar
Rogers said Hong Kong would be able to improve the efficiency and profitability of trade with mainland China should it abolish its local currency and adopt the yuan once the mainland Chinese currency becomes fully convertible.
``You have a gigantic neighbor who's becoming the most incredible economy in the world,'' Rogers said. ``It'd be like having a special currency for Mississippi when the rest of the U.S. uses the U.S. dollar.''
He said he wouldn't be surprised if the yuan becomes fully convertible by the time Beijing hosts the Olympics next year or the 2010 Shanghai World Expo.
To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net .
Last Updated: November 12, 2007 05:27 EST
http://www.bloomberg.com/apps/news?pid=20601213&sid=at_rv3aCT._4&refer=home
Rogers Bets Against U.S. Investment Banks, Housing (Update1)
Rogers Bets Against U.S. Investment Banks, Housing (Update1)
By Saijel Kishan and David Clarke
Oct. 31 (Bloomberg) -- Jim Rogers, co-founder of the Quantum Hedge Fund with billionaire George Soros, boosted his bets against U.S. securities firms because of their salary ``excesses'' and money-losing investments.
Rogers said he increased his year-old short positions in the past six weeks in U.S. investment banks, using exchange-traded funds and bets against individual companies he declined to name. Stocks in the industry, which pays too much in bonuses, may fall as much as 70 percent in a bear market, he said.
``You see 29-year-olds on Wall Street making $10 million to $20 million a year, and they think it's normal,'' Rogers, 65, said in an interview in London today. ``There have been lots of excesses,'' said Rogers, chairman of Beeland Interests Inc.
The top five U.S. securities firms will probably earn a combined $29.3 billion this year, according to analysts surveyed by Bloomberg, breaking a three-year record streak after Merrill Lynch & Co. reported a $2.2 billion third-quarter loss. Goldman Sachs Group Inc., Morgan Stanley, Merrill, Lehman Brothers Holdings Inc. and Bear Stearns Cos. earned $30.7 billion last year, three times more than their profit in 2002.
Goldman Sachs, Wall Street's most-profitable securities firm, said Sept. 20 that it set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of the year, topping the record amount for all of last year.
A month later, Merrill Lynch reported its biggest quarterly loss amid $8.4 billion of writedowns for subprime mortgages, asset-backed bonds and bad loans. The 12-member AMEX Securities Broker/Dealer Index has fallen 13 percent since the start of June, while the Standard & Poor's 500 Index was little changed.
`Bad Paper'
``Who knows how bad the balance sheets are,'' Rogers said. ``They took on gigantic amounts of bad paper.''
Money managers such as Rogers take short positions by selling borrowed shares. They aim to buy them back at a lower price and pocket the difference.
Rogers said he made the investments using his own money. He declined to say how much he oversees.
The slump in the U.S. housing market ``still has a long way to go'' before recovering, he said. ``Market excesses don't clear themselves out in just four or five months; they take years.''
Sales of previously owned homes in the U.S. dropped 8 percent in September to 5.04 million, the lowest since record-keeping began in 1999, the National Association of Realtors said Oct. 24. Rogers said he started shorting U.S. home stocks three years ago.
Still, Rogers said he managed to offload his six-story townhouse in New York, which he put up for sale last year, for more than his asking price of $15 million. He declined to disclose the selling prices for the Riverside Drive property because the sale is still being processed.
`Doing Well'
``Some part of the U.S. housing market are doing well and some aren't,'' he said.
Rogers is best known for being a commodities bull since 1999, before the market started to rally in 2001. His Rogers International Commodity Index has more than quadrupled since its start in 1998, while the Dow Jones Industrial Index gained 56 percent.
``History shows that the bull market in commodities will last a long time,'' Rogers said last year. He predicted in 2005 that commodities will rally at least until 2014 and perhaps until 2022.
Rogers also has taken high-profile investment stances that didn't pan out. He said last year, for example, that India was a losing investment idea.
``I just don't think it's going to work,'' he said in a Nov. 1, 2006, interview. ``As far as investing in India as a whole, you will get wind in your face.''
Since that time, India's main stock index, the BSE Sensex, has climbed 52 percent, reaching a record high yesterday.
To contact the reporter on this story: Saijel Kishan in London at skishan@bloomberg.net
Last Updated: October 31, 2007 12:57 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=au.vAYBvBP4I&refer=home
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By Saijel Kishan and David Clarke
Oct. 31 (Bloomberg) -- Jim Rogers, co-founder of the Quantum Hedge Fund with billionaire George Soros, boosted his bets against U.S. securities firms because of their salary ``excesses'' and money-losing investments.
Rogers said he increased his year-old short positions in the past six weeks in U.S. investment banks, using exchange-traded funds and bets against individual companies he declined to name. Stocks in the industry, which pays too much in bonuses, may fall as much as 70 percent in a bear market, he said.
``You see 29-year-olds on Wall Street making $10 million to $20 million a year, and they think it's normal,'' Rogers, 65, said in an interview in London today. ``There have been lots of excesses,'' said Rogers, chairman of Beeland Interests Inc.
The top five U.S. securities firms will probably earn a combined $29.3 billion this year, according to analysts surveyed by Bloomberg, breaking a three-year record streak after Merrill Lynch & Co. reported a $2.2 billion third-quarter loss. Goldman Sachs Group Inc., Morgan Stanley, Merrill, Lehman Brothers Holdings Inc. and Bear Stearns Cos. earned $30.7 billion last year, three times more than their profit in 2002.
Goldman Sachs, Wall Street's most-profitable securities firm, said Sept. 20 that it set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of the year, topping the record amount for all of last year.
A month later, Merrill Lynch reported its biggest quarterly loss amid $8.4 billion of writedowns for subprime mortgages, asset-backed bonds and bad loans. The 12-member AMEX Securities Broker/Dealer Index has fallen 13 percent since the start of June, while the Standard & Poor's 500 Index was little changed.
`Bad Paper'
``Who knows how bad the balance sheets are,'' Rogers said. ``They took on gigantic amounts of bad paper.''
Money managers such as Rogers take short positions by selling borrowed shares. They aim to buy them back at a lower price and pocket the difference.
Rogers said he made the investments using his own money. He declined to say how much he oversees.
The slump in the U.S. housing market ``still has a long way to go'' before recovering, he said. ``Market excesses don't clear themselves out in just four or five months; they take years.''
Sales of previously owned homes in the U.S. dropped 8 percent in September to 5.04 million, the lowest since record-keeping began in 1999, the National Association of Realtors said Oct. 24. Rogers said he started shorting U.S. home stocks three years ago.
Still, Rogers said he managed to offload his six-story townhouse in New York, which he put up for sale last year, for more than his asking price of $15 million. He declined to disclose the selling prices for the Riverside Drive property because the sale is still being processed.
`Doing Well'
``Some part of the U.S. housing market are doing well and some aren't,'' he said.
Rogers is best known for being a commodities bull since 1999, before the market started to rally in 2001. His Rogers International Commodity Index has more than quadrupled since its start in 1998, while the Dow Jones Industrial Index gained 56 percent.
``History shows that the bull market in commodities will last a long time,'' Rogers said last year. He predicted in 2005 that commodities will rally at least until 2014 and perhaps until 2022.
Rogers also has taken high-profile investment stances that didn't pan out. He said last year, for example, that India was a losing investment idea.
``I just don't think it's going to work,'' he said in a Nov. 1, 2006, interview. ``As far as investing in India as a whole, you will get wind in your face.''
Since that time, India's main stock index, the BSE Sensex, has climbed 52 percent, reaching a record high yesterday.
To contact the reporter on this story: Saijel Kishan in London at skishan@bloomberg.net
Last Updated: October 31, 2007 12:57 EDT
http://www.bloomberg.com/apps/news?pid=20601087&sid=au.vAYBvBP4I&refer=home
http://oasc08008.247realmedia.com/adstream_sx.ads/bloomberg/tvradio/tv/vod/120518@Middle
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