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Crisis, What Crisis?

There was some sobering news recently for anybody who’s interested in finance and money – and, let’s face it, that means all of us!  However, for all the business owners here in the UK, this is even more worrying.  According to legendary investor, Jim Rogers, we’re heading towards a huge market crash that he reckons will “rival anything he has seen in his lifetime”.  So, let’s take a little look at Jim Rogers and then go on to analyse his prediction to Business Insider magazine.

Jim Rogers is a 75 year old American businessman, investor and financial commentator who co-founded the Quantum Fund (privately owned hedge funds advised by George Soros) and created Rogers International Commodities Index (RICI).  RICI is a broad index of commodity futures which was designed to meet the requirement for consistent investing in commodities through an international vehicle. 

In 2007, Rogers sold his mansion in New York City and moved to Singapore, claiming that it is a ground-breaking time to invest in Asian markets.  Indeed, his daughters speak fluent Mandarin at his insistence to prepare them for the future.  In an interview the following year, Rogers claimed that people in China are extremely motivated and driven and that he wants to be in that environment so that his daughters are motivated and driven. 

So, back to Rogers’ interview with Business Insider and his predictions for the coming “financial apocalypse”.  Having revealed that he learned very early in his investing career that he needed to invest in what’s happening in the world, as opposed to what he wants to invest in, Rogers claims that some stocks in America are turning into a bubble which will collapse later this year or next year! 

When questioned on what would trigger the collapse, Rogers was unsure, but had the following views.  When Iceland went broke in 2007, it was closely followed by Ireland going broke, then Bear Stearns and the Lehman Brothers, causing things to spiral out of control.  Rogers claims that this sort of situation begins where we’re not focussing attention (people in the USA apparently had no idea that Iceland was a country with a market).  He now believes that the collapse will begin somewhere “where we’re not looking”.  It may be an American pension plan going broke, it could be war (though he believes that to be unlikely) or some other scenario. 

When asked about how big the crash is likely to be, Rogers predicted that it will be the worst in our lifetime.  He looked back on the history of financial problems in America, which he says occur every four to seven years and ascertains that it has been eight years since the last crash, so we’re overdue.  He also predicts that the debt problems which caused the crash in 2008 is “nothing compared to what it happening now”. 

Rogers forecasts that the next crisis will begin with interest rates being raised before we see some serious situations that politicians and bureaucrats will attempt to address unsuccessfully.  He foretells that both governments and nations will fail in much the same way as Iceland did eight years ago and that we will see long standing institutions fail. 

This is a gloomy outlook for both businesses and individuals and, if Rogers is to be believed, now is the time to begin making plans for a more secure future.