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Euro Zone Will Pay ‘Terrible Price’: Jim Rogers

Monday, 10 Sep 2012 | 4:34 AM ET

A “terrible price” will be paid for the euro zone crisis eventually, whether the European Central Bank (ECB) embarks on mass bond purchases or not, Jim Rogers, investor and co-founder of the Quantum Fund with George Soros, told CNBC Monday.

Rogers said: “These guys have been saying the same old garbage for a long time. It’s not a game-changer – it’s good for the market for maybe a month. The debt keeps going higher and higher and eventually we’ll all going to pay a terrible price.”

He warned that the market rally, which many have seen as an opportunity to get back into riskier assets, would only be a short-term rebound. (Read More:ECB Setting Markets Up for Let-Down)

“It’s not an opportunity to make money for me. This is not good for the market and it’s not going to last. Every three or four months they (euro zone politicians) have a summit and they say: Ok guys, everything is ok now. The market goes up. But we’re getting a little tired of this and the market is getting a little tired of this,” Rogers argued. (Read More: ECB Plan Comes Too Late)

Rogers: Policy Makers Saying 'Same Old Garbage'
Jim Rogers, chairman of Rogers Holdings, says the ECB bond-buying program is not a game changer and will only raise the level of debt and make the situation worse. "These guys have been saying the same old garbage for a long time", he tells CNBC.

There should be some opportunity to make money in the short term, Peter Toogood, director of investment, Old Broad Street Research, said.

“There is a little window for risk trade – not a sustainable one, but there’s some stability to the short-term outlook,” he argued. He pointed out that ECB President Mario Draghi “has already been expanding the balance sheet through disguises.”

Some point out that the ECB will hold off on the bond-buying program – known as Outright Monetary Transactions (OMT) – which will raise its balance sheet, until there are much firmer conditions imposed. This makes it less like classic inflationary money printing. (Read More:Italy Has no Plans to Access New ECB Plan: Monti)

Carl Weinberg, chief economist, High Frequency Economics, said that he doesn’t think the ECB will print money in Europe any time soon.

“We’re going to have the same old, same old all over again. It’s just another twist on the same old story, but right now they’re not doing anything,” he said.

“Draghi couldn’t get past the Germans for an inch if he didn’t agree to sterilize the proceeds.”

Opinion is also divided on how the potential to buy (rephrase?) huge tranches of the bonds of shakier economies, to try and keep their borrowing costs at sustainable levels, will affect the commodities markets.

Weinberg pointed out that the OMT plans are probably on too small a scale to affect the commodity markets long term. While they have been described as “unlimited”, countries which apply for the assistance have to meet certain conditions for their budget and fiscal reform.

Rogers, famed as a long-term commodities bull, said there was no reason to correct this stance. (Read More: Jim Rogers on Commodities)

“The bull market in commodities will end some day – but some day is a long way away,” he said.

“Commodities have been correcting for a while. Now everybody knows they’re throwing money into the market, and history tells you that when they do this the way to protect yourself is to own real assets whether it’s silver or rice. If the world economy gets better, I own commodities because there’s shortages developing. If it doesn’t they’re (central banks) all going to print money. It’s the wrong thing to do, but it’s all they know to do.”

Contact Europe: Economy

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