Abolish the Federal Reserve and let AIG go bankrupt for the world economy to emerge cleaner from the financial meltdown, legendary investor Jim Rogers told CNBC a year ago.
But governments around the world have rushed to bail out banks and pumped trillions of dollars in their economies to avert an economic disaster. A year after Lehman Brothers collapsed, here is what Jim Rogers tells CNBC (most recent quotes at the bottom):
- When Lehman went bankrupt, "I thought thank goodness they're finally letting somebody collapse." Former Treasury Secretary Henry Paulson should have let "10 people go bankrupt."
- Watch the CNBC interview with Jim Rogers above.
- "I know that you have to have these people watching your TVs shows, but there’s 6 billion people in the world, which is a bigger world than just CNBC."
- "Banks have been going bankrupt for a few hundreds years. The way the system works is when somebody fails you let him fail. What we're doing now is we're taking the assets away from the competent people and giving them to incompetent people and telling them now you can compete with competent people with their money."
- "How can the solution for debt and consumption be more debt and more consumption? How can that be the solution to our problems?"
- "We have regulation. The regulators didn’t know what we were doing… they were incompetent."
- "Of course the system is the same, the debt hasn't disappeared. The debt is still out there, this hasn't solved the problem, it made it worse."
- The current recovery is just a consequence of the fact that consumption fell so dramatically in 2008 and people have to buy things they need in 2009, but there are worse things ahead, Rogers said.
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- "You see America starting protectionism yet again this weekend…. We are going to have currency crises, this is not over yet." He said protectionism is rife across the globe.
- "China saved up a lot of money for a rainy day, it's raining and it's spending it. But China cannot pull out America or India or Europe from all this. Their economy is a 10th of the US. Hallelujah, let them do good things but they're not going to save the world."
- "I would expect there to be a currency crisis or a semi-crisis this fall or next year. It's crony capitalism, Bernanke and Greenspan have brought crony capitalism to America … but that's not going to solve the world's problems."
- "Central Europe has gigantic amounts of horrible, horrible debt that hasn't been dealt with."
- "We haven't seen the worst yet."
This Day 1 Year Ago - A CNBC Special Report - See Complete Coverage
- "Politicians don't have it right, that's the problem. Had they let LTCM fail and the effects run through the system we wouldn't have all these problems."
- "All the government officials and bureaucrats loved the fact Lehman failed, because they could all jump in and support banks."
- "This whole problem was not caused by Lehman Brothers or Lehman Brothers failure. Lehman was an effect not a cause."
- "The real problem over the past 10-15 years has been that regulators have not let people fail. Had they let people fail we would have solved this problem a long time ago. I don't know why they're not in jail."
- "You can get rid of them (toxic assets) by giving them bonuses to bankers. Most of the toxic waste came from the bankers, let them have it. Pay regulators in toxic assets as well."
- "When people fail, new bankers rise and take over. In my lifetime on Wall Street 20-30 banks failed."
- "Goldman Sachs started in the 20s when everybody else was failing. So what if they fail? Turn in their Lamborghinis and start driving taxis."
- "We're going to have zombie capitalism for the next 15-20 years. How long are you going to let the bureaucrats run the thing so we can't have a clean system?"
- "One thing which has changed is the fact that the Fed has tripled its balance sheet… and the US government has tripled, quadrupled, quintupled, who knows, they don't even know, its debt"
- Next year we may see currency problems, protectionism problems because of this, Rogers warned.
- "All the money in the world is now in Asia. All the assets are in Asia now, the largest debtor nations are all in the West."
- "In currency crises, you can't sit around and say look guys, don't worry, in the next 15 years we're going to be ok. They worry about the next 15 minutes."
- "We should be worrying about the next year and next year going forward. This weekend America pulled out another bout of protectionism against China. I'm very worried about it, protectionism helped the Great Depression."
- "We're going to have some serious problems in currency markets, we're going to have serious problems in the world markets if we see protectionism raising and raising again."
- "I own basically commodities where the fundamentals are getting better… I own particularly the yen and the Swiss franc. I don't own many stocks, only in China."
- "For one of the few times in my life, I don't have any shorts."
- "What they (investors) should do is worry about all the debt developing in the US. They should short bonds because that's the next bubble that's building in the US." 11:55 CET (5:55 New York time)
