Wednesday, May 4, 2016
Trade wars leads to increased bankruptcy and could lead to war - Part 2 of RT interview
This is part 2 and final part of Jim Rogers interview with RT TV host - Sophie S
JR: America will, for the most part, because many people think that America still is the dominant economy, it is the largest economy in the world.
SS: So, it is - objectively speaking, still, right?
JR: It's the largest economy in the world right now - but it's also the largest debtor nation in the world, and most of the growth in the past few years has been based on debt. Sophie, you give me a trillion dollars, I'll give you a very good time. You and me will have so much fun, if you give me a few trillion dollars. But the hangover, the headache is going to be so horrible, because somebody has to pay for this, and America's debt is going through the roof. So, yes, America's leading the world economy, but it's all based on printed money and borrowed money. In the end, it's going to be a disaster for all of us.
SS: So, obviously, when the crisis hit, people tend to look for safe havens, and a lot of people still think that "safe haven" is the dollar: they like to save their money in dollars, not in euros, not in yens or roubles - in dollars. You don't think so? Why not?
JR: I actually own a lot of U.S. dollars, just because of what you've said. Because everybody thinks that the U.S. dollar is a "safe haven". It's not, America's the largest debtor in the world history, but people think it's still a safe haven and they want to...they're not going to buy euro as you said, they're not going to buy the rouble, they're not going to buy other currencies in the world, so they're going to flee to the U.S. dollar. My largest currency possession is the U.S. dollar.
SS: So what do you need them for? You're just going to sell them when the times are better?
JR: That's my plan, I hope I got it right. You know, then we're going to have a really good time if the dollar goes up, like I think it will, hopefully I'll be smart enough to sell my U.S. dollars, as it gets overpriced, could even turn into a bubble, and then I got to do something with my money.
SS: When do you think that'll happen?
JR: Later this year, next year.
SS: Oh, so it's, like, a close perspective.
JR: Yes, it's 2016. I told you to be worried! Get prepared! And by the way, I just want you to know, speaking of currencies. A week before that, I bought Russian government bonds in roubles.
SS: Wait, wait, we will get to the Russian bonds, but first - we see foreign governments, actually dumping U.S. debt at a record rate. Why do we see this diminished appetite from overseas? Do they just need the cash?
JR: Sophie, I'm not the only person who knows that the U.S. is the largest debtor in history, and debt is going higher and higher. Other countries see it, but many other need the money - Russia needs money these days, you know, China's trying to cut down its dependence on the U.S.. China's entire foreign currency reserves...
SS: I was going to say - China and Japan - I mean, they own trillions in American Treasury, even Russia has increased its investment in the U.S. debt. Do they not sense the trouble? Do they not see that it's the biggest...
JR: ..Debtor nation in the history of the world? Well, the Japanese need money, they're in recession. Many countries need money, but the holdings of the U.S. government debt is declining, you're right. More and more governments, for whatever reason, are reducing their holdings of U.S. government debt - and they're wise.
SS: So, U.S. dollar is slowly forfeiting its position, right? Could something else take its place? What could it be?
JR: We need something to compete with the U.S., because it is a terribly flawed currency. Now, you look around the world and there's nothing on the horizon, except, possibly, the renminbi. Renminbi is a huge economy, it's not a huge debtor like many other countries, so the renminbi is the only one I can see. Now, the renminbi is not convertible, so it's an absurd statement, but, it is becoming more and more convertible, more and more freely tradeable, and as that happens, it's the only currency that I can see that will replace the U.S. dollar or begin to compete with the U.S. dollar. It takes a lot of time to get rid of old currencies.
SS: Right now, as we speak, what is safe in terms of commodities? Is gold safe, for instance?
JR: I own gold, I hope I still have it here, yeah, I have gold.
SS: Can I have it?
JR: You can look at it - just a proof to you that I have gold. I even have some Russian gold in here.
SS: Nice coins.
JR: There it is, Russian gold. So, I own some gold, but I am not buying gold now, I haven't bought gold in a while, I expect a better chance to buy gold, sometime in the next year or two, if the dollar goes up, gold may go down. But, if it goes down, I hope to buy a lot more gold, because eventually gold is going to go through the roof. As this turmoil increases and people lose more and more confidence in governments, more and more confidence in paper money, they're going to look for something, and gold and silver will be a couple of those places. If you're looking for something right now - agriculture.
SS: Wait, you believe that the future is in agriculture, that farmers are the billionaires of the future - but why farming? I mean, it does seem like it's a step back in history, no, rather than the other way around?
SS: Just like going back to gold, or going back to typewriters, because everything is wired, and the only safe way is to typewrite things.
JR: Do you know how to drive a tractor?
SS: No, I don't. I don't even have a driving license.
JR: Really? Not even a car?
JR: Oh my Gosh, I don't know if I ever met anybody...
SS: I'm the old-fashioned type. So tell, why farmers, why are they the future billionaires?
JR: For many periods of history, we had moments when farmers, when the agriculture people were on top, followed by people on the financial types, and others were on top, going back to the farmers - people who produce real goods. This has been going on for thousands of years. All these cycles come and go. Now, agriculture has been a horrible business for 30 years, the average age of farmers in America is 59. In Japan, it's 66. In Canada, it's oldest in recorded history. The highest rate of suicide in the UK is in agriculture. Millions of Indian farmers go... This is a terrible business! Horrible business and it has been for over 30 years. More people in America study public relations than study agriculture.
SS: So where is the future in agriculture?
JR: You're supposed to buy low. Didn't your parents teach you to buy low and sell high? Agriculture is the disaster. Now, either it's going to get better or we're not going to have any clothes or any food at any price. The turn is coming. Agriculture in Russia, for instance, right now, is becoming very-very exciting, very-very profitable, you should go out and learn how to drive a tractor! I'm telling.
SS: I might, after this interview. I don't want to be left without clothes.
JR: And where we're going to get our vodka?
SS: I know.
JR: I mean, for goodness' sake!
SS: I'm going to go and learn how to drive a tractor after this, I promise. Alright, tell me in broader terms, where should be people looking to invest geographically, whether it's agriculture or business, or finances?
JR: I have sold short the U.S. stocks and I have sold junk bonds, low-grade bonds, in the U.S., I own shares in China, I have shares in Russia, I bought Russian government bonds, several days ago. These are places that I am looking at, I am looking at Kazakhstan as a place to invest, Iran I'm looking at, Nigeria I am looking at.
SS: Tell me about Iran, because, you know, it's out of the international isolation, it's a huge untapped market...
JR: Yes, very young - something like 2/3 of people are under 35 years old, it's a very young country with lots of people, over 70 million people.
SS: Where exactly they should be investing in Iran, in what fields?
JR: You can invest in oil if you want to, but...
SS: That's obvious.
JR: If you invest in Iran oil, you're investing in oil whether you want it or not. Anything - they've been under sanctions for a long time, they want everything. Tablecloth, soap - whatever you know about, you go to Iran and invest in those things, or buy shares on Iranian stock market. It's still difficult for me, as an American, so you should go there, before the Americans get there. It's wonderful for you, you're Russian...
SS: I couldn't beat them in Cuba, and now it's too late...
JR: You don't have to compete with the Americans in Iran.
SS: But talk to me about Russia - you keep saying that you like invest here, but the rouble is losing its value and the general opinion is that it's not a good place to invest. Why is it good to invest in Russia right now?
JR: The Russian stock market is the most hated stock market in the world.
SS: Not only the stock market, Jim.
JR: What else, the country, the women? What are you talking about! Anyway, I like to invest in unpopular places, unpopular stock markets. I have learned in my career, that if you invest in things which everybody dislikes, you're probably going to be very well off 2, 3, 5 years later. I can remember just about every country which has been very depressed at times, if you buy - it turns around.
SS: So you expect the rouble to rebound?
JR: It already has started rebounding. It's rebounded, I except that the rouble will not go down. The rouble is in a process of making a bottom. Oil is in the process of making to bottom, therefore the rouble, but - Russia now has things which are replacing oil, agriculture is booming in Russia now, for many reasons, some artificial but some real. So there are other things that are going to replace oil in the future.
SS: So, yeah, about oil - you've said in January that oil prices haven't hit the rock bottom yet, but now they're rising. Should we expect them fall again?
JR: The prices did go down dramatically after I said that, and it did hit a bottom. What normally happens, Sophie, is things go down, we had a big drop, it hits a bottom - and then, what we call in America a "dead cat bounce" - it bounces right there.
SS: So what's going to happen not?
JR: You had the "dead cat bounce", and then it goes back, it tests the lows, and then it's the end - it's at the end of the big collapse and then it starts going up again. That's what's going to happen.
SS: So where we are right now? We are at the first hike?
JR: We had the dead cat bounce...
JR: We're probably going to have some correction, it may go higher, but it probably will go lower for a while, feel around, test the bottom, that will be the bottom, and then 2 or 3 years from that it will be higher again.
SS: So the rebound is in 2-3 years.
JR: Maybe sooner, probably this year or next.
SS: But I'm thinking, cheap oil...
JR: I wanted to tell you one thing, Sophie - I'm the world's worst market timer. I'm the world's worst short-term trader, so I don't know. You watch RT and you can find out the exact timing of these things, I am terrible at it.
SS: Okay, you're just like a good clairvoyant, because when they predict the future, they say right away - "We're good but we can't see the time".
JR: I didn't know that's what they've said.
SS: That's what they say.
JR: That's what they say? Well, okay.
SS: So, back to the oil, I'm thinking, cheap oil is actually good for a global economy, no? Isn't cheap energy a driving factor for growth in giant countries like China or India?
JR: It's absolutely, and more people then consume energy, then produce energy, there's no question about that, it's better for all of us. But, in the meantime, many people are suffering - Russia, Nigeria - many people are suffering with lower energy prices, but overall, the world is better off with low-energy prices.
SS: So, what do you think is in store for the emerging economies like Brazil, India?
JR: There are many-many emerging economies, so there's no generalization.
SS: China isn't quite an emerging economy. I am talking about the emerging big economies.
JR: First of all, China is the next great country in the world. The 19th century was the century of the UK, the 20th century was the century of the U.S., the 21st century is what's going to be the century of China. So, you have children?
SS: Will have soon...
JR: Okay. Horosho. Then be sure, your children learn mandarin, because it's going to be an extremely important language in their lifetime. I have two girls, both speak perfect mandarin, because I am preparing them or the 21st century. Now, you say it's not an emerging market - okay.
SS: I mean, not anymore..
JR: Okay, that doesn't matter. Let's see... Conceivably, Russia, certianly not Brazil. Kazakhstan - amazing changes, positive changes are taking place in Kazakhstan. Amazing, positive things are happening in Nigeria. Not Brazil.
JR: If you're going to visit only one country in your lifetime, Sophie, go to India. But, it's not a good place to invest. Not with my money anyway. It's got the world's worst bureaucracy - many reason.
SS: Worse than in Russia?
JR: Yeah, the Indians learned bureaucracy from the English, and then they took it to a higher plane.
SS: Took it to the whole new level, huh.
JR: The whole new level, it's astonishing what the Indians can do. I mean, Russian bureaucracy is a nightmare, there's no question about that. You should have been here when there were Soviets - oh my God, was it a nightmare! It's getting better, but it's still bad, you're right.
SS: I want to talk a bit about the upcoming elections - Donald Trump is doing so impressively well, who would have thought? He may even get the Republican nomination, and who knows, he may even make it to the White House!
JR: He might win, yes.
SS: So it will be the first time we'll have a businessman at the helm of a state. Do you think that will change anything? Having a businessman being a President?
JR: If Donald Trump does what he says he's going to do, we're going to have trade wars with lots of people, such as China, such as Mexico, probably Russia, who knows - and trade wars have always led to bankruptcy and, often, led to war. So, if mr. Trump does what he says he's going to do - I've told you to be worried. If mr. Trump wins and does what he says, you'd better be panicked, because the world is really going to fall apart. It is an absolute disaster, the worst might happen and we might have big wars at that point. Now, one thing about it, Sophie - you have job security, because journalists have to report it, somebody has to report to us what's going on and if this is all very bad, which will happen if he does what he says, it's going to be really, it's going to be a terrible world. I worry about my little girls in that world.