Markets worldwide are clueless and things may stay that way for the next year or two as economic recovery is mainly fuelled by government bailouts of failed economies, says Jim Rogers, commodity guru and influential investor.
“The problems are not over. If you pump lots of money into an economy, it looks better but essentially it’s artificial. We are going to see more problems in the US over the next year or two,” Rogers said in an interview to Bloomberg UTV.
Protecting debt-stricken countries is illogical, since a problem of too much debt and consumption cannot be solved with more debt and more consumption, Rogers said. His prescription: debt-loaded countries should be allowed to go bankrupt and left to reorganise themselves.
“Short-term pain is much better than to lose two, three decades. Who knows how long it might be? ” he said.
“I assure you it would not be fun if Greece goes bankrupt. It would not be fun for Greece or for me or even you, but it’s better to go ahead and have the panic and the problems now than to put a band-aid on and say everything is ok.”
However, Asia is the place to be since there is a transition from West to Asia, Rogers said. “The good thing is you are in Asia, don’t leave, don’t move you are at the right place at the right time,” he said, adding, the world’s largest credit nations are in Asia and the largest debt nations are in the West.
Rogers also said that commodities as an asset class are the next investment destination as there are shortages developing in the world, “I am not sure of stocks for the next 18 months.”