Investors should not sell into a selling climax, according to Jim Rogers, the CEO and Chairman of Rogers Holdings.
Speaking following a 500 point drop in the Dow Jones index on Thursday, the veteran investor noted that 500 points is not what it once was, but warned the heavy selling was a result of huge debts being run up by the United States and Europe.
“We have had this debtcharade (over the debt ceiling) in the US in recent days and the Europeans are not doing anything about their debts either,” said Rogers in an interview with CNBC.
“There are huge imbalances in the global economy and markets had to crack,” added Rogers, who founded the Quantum Fund with George Soros in 1970.
Asked what he would do to boost the global economy, Rogers dismissed the idea that more government spending to jobs was not the answer.
“You need to take an axe to debt, you need to take a chainsaw to the debt,” said Rogers who also dismissed the idea that another round of quantitative easingwas the answer.
“America is making horrible mistakes. It is the largest indebted nation in the world and is going deeper and deeper into debt. The world is not in good shape the markets got to correct and take care of these imbalances,” he said.
“The market should be allowed to bottom out. QE1 (the first round of quantitative easing) and QE2 didn’t work. Let the market bottom out as more money printing will just make matters worse” said Rogers.