Jim Rogers on the Greek Bailout
from The Big Picture by Barry Ritholtz
Full Transcript – Jim Rogers on the Greek Bailout – November 4, 2011 below.
Reuters: Jim, first we had a referendum then we didn’t. Now there’s talk
of a coalition government. How do you see this Greek drama playing out here?
Jim Rogers: Jon, all of this is just pushing for problems out into the
future. Everybody is trying to get past the next election and it’s not
going to end well at all. It’s going to end very, very badly for all of us.
There are huge staggering numbers involved but not just Greece, all over
Europe and these guys just don’t seem to get it.
Reuters: Well let’s talk about that because you know, you’ve got the UK
saying now Greece is likely to stay but should they stay?
Jim Rogers: Should they stay in the EU? Of course, they should. And they
should stay in the Euro as well. But what they should do is declare
bankruptcy and everybody takes some losses, and there will be huge losses.
You ring fence the bags and you know, make sure everybody’s checks clear.
But just pushing this out into the future, you know, all of these plans, Jon
, show everybody deeper in debt next year; deeper and deeper in debt in two
years; deeper, deeper, deeper in debt in three years. This is not going to
solve our problems.
Reuters: Okay. Well, Jim, let’s hear what Sarkozy had to say last night.
Sarkozy (soundbite): We have to react now and if yesterday’s meeting had
any interest at all, it’s probably that they were a form of electric shock
therapy, a positive one so that everything goes in the right direction.
Reuters: So electric shock therapy there. But you know, are the Greek people
really ready to accept these austerity measures, do you think?
Jim Rogers: Jon, if they don’t, they go bankrupt. Who’s going to put up
the money? Are you going to put up the money to bail them out anymore?
Somebody’s got to have money in order to solve these problems. Let the–
refuse to accept it. That’s fine. But then where would they go to get their
money?
Reuters: Well, I mean that’s the point – the EU – that’s the point the
EU leaders made, right? And that was the first time we saw the EU leaders
really openly discussing the exit of a Euro member. So I mean to me, this
makes me wonder – is this a step towards the end of a grand experiment?
Jim Rogers: Well they don’t have to leave. In America, we’ve had states go
bankrupt, cities, counties. This has happened before. It didn’t end
America, didn’t end the US Dollar. You let entities collapse, go bankrupt.
This happens all the time. This happened throughout history. That’s all you
have to do, let them go bankrupt, let the people who made the bad loans
take their losses and start over from a sounder base. But just pushing into
the future and letting debt go higher and higher will mean it’s going to
end very, very badly and then you know, five years from now, you may have a
complete collapse of the Euro, the EU and for that matter, all the Western
world.
Reuters: You’ve said that yourself, if Greece goes, next will be Spain,
Italy et cetera. So how can these guys – how can they actually let Greece
go bankrupt in that situation?
Jim Rogers: Jon, how can they not? How can they not? Are you going to put- I
’ll ask you again, are you going to put up the money because I’m not.
Eventually, letting these debts go higher and higher and higher means the
pain will be worse in three years, Jon, or five years or whenever the market
says, that’s it, no more. Now at least if you do it, the government still
have some credibility and some finances such as the Germans. You put
everybody in the room, you say, okay, you’re going to go bankrupt. Your
banks, Europe’s financial institutions has got to survive. Everybody’s
checks will continue to clear. The system is going to stay up, stay stable
and stay upright.
Reuters: So is there an orderly way to do that though-?
Jim Rogers: -in five years, there would not be anybody to pull into room and
say, okay, we’re going to hold you together. Nobody will have any
credibility anymore.
Reuters: Sure. But okay, so on that, is there an orderly way to do that? Can
we actually see that happen and still have this all stay together?
Jim Rogers: Yes, we can do it. If we do it now, when Germany still has a lot
of credibility; Finland, I mean for those tiny little countries but there’
s still enough credibility of the governments and of the finances of the EU
that you could pull it together. If the market forces you in five years, Jon
, or three years, then nobody can hold it together, then massive bankrupts
around the world, systemic collapse, the whole system is a mess.
Reuters: Okay. Well, Jim, now at the G20, we’re hearing plans for the IMF
to boost its power, expand the use of SDRs, in effect almost turning into a
type of reserve currency. So what’s your reaction to that? Do you think
that’s the right direction for the IMF?
Jim Rogers: Many people in the G20, as you call them, they don’t have any
money either. You expect the Americans to put up the money to solve these
problems? Now many of the G20 countries have their own problems. Going
forward, that’s not going to work. We can try SDRs, but what do SDRs solve?
That doesn’t solve anything, and just creates more credit. That’s not
going to solve the problem. We have a- Jon, we have a problem of too much
consumption and too much debt. You cannot solve a problem of too much debt
with more debt. Even if it’s artificial debt, even if it’s paid debt, it
just makes the system worse and when the system finally collapses, then
there’s nothing anybody can do. Nobody can hold it together at that point.
