Jim Rogers Interview From Russia ~ market folly

Friday, February 13, 2009

Jim Rogers Interview From Russia

Jim Rogers latest thoughts from February 5th in Russia:

"Thanks very much for giving us your time, first of all and welcome to Russia. You have made some investments in China because the government is planning big stimulus plan there, what are you making of what Russia`s doing, do you see anything interesting here in Russia that you're investing in?

In October, November I did buy more Chinese stocks but I am not buying shares in any other country in the world right now, because most of the world is in serious trouble including China. Don't get me wrong, but I'm not investing anywhere and certainly not investing in Russia.

Certainly not, why?

Well, I am certainly not investing in America either, for that matter and certainly not in the UK but no, the Russians have lots of problems, deep seated problems as far as I am concerned, perhaps there`s a chance Russia will continue to disintegrate in more than one country. There are lots of potential problems in the former soviet union.

Disintegrate, you mean, into separate countries?

The soviet union broke up into 15 countries, Russia itself has the potential to continue to break up, the Ukraine may break up Kazakhstan could break up, this is still not stable and every empire has disintegrated through out history. The reverberations have gone on for long periods of time. So I am sure there's good investment in Russia if you're on the ground and you can stay with them, but not for me.

What in your opinion is Russia doing right and what is Russia doing wrong in handling this crisis?

Well, what they're doing wrong is that they are propping up their banks which I find reprehensible I find bad economics and bad morality as well, the way the system is supposed to work is suppose you take the assets from the incompetent and give them to the competent and you start over from a stronger base. Well the Russians are making the same mistakes that the British and the Americans and everybody else is making. But taking the assets from the competent and giving them to the incompetent and know thy can compete with the competent, it weakens the whole system. Putin at least seems to understand that there is a problem with the US dollar, that the world needs to adjust to that problem, he seems to understand some of the problems the world faces better than we do in America, but for the most part the Russians are making mistakes too.

You said the Pound is finished, what is your take on the ruble?

Ahhh, the ruble. That's a very good question. I am not sure, even if I had an answer I am not sure I would give it to you. No, I am not optimistic about the future of the Ruble at all. The Russian at least have natural resources to some extend but I am not optimistic about the continuing stability of Russia. The natural resources, the reserves are declining as you know, because they have been stripping the assets here in Russia for some time. Oil production peaked, production of most things peaked in Russia for the foreseeable future, so I am not buying the ruble either.

The Government announced that it would defend the ruble at 41 against the Euro / Dollar basket. Was that a mistake to announce a target?

It always as been in the past the market has learned in the last few sessions that you can always bet against the central banks and you will make money eventually. So when a central bank says “don't you worry the pound is going to stay here or the ruble is going to stay here or whatever, ultimately that has always failed if the fundamentals are not sound and will fail again, everybody knows what the target is.

What is driving the fall of the ruble? Is it regular people panicking and putting their money into dollars, that one thing we`ve heard from bankers here at this forum, or is speculation?

Its mainly the Russians, in fact whenever a currency fails through out history it has always started internally, the foreigners always get the blame because the politicians like to blame all their problems on the foreigners, because they don`t vote and their not there. Right now I think there something like 20 or 25% of deposits in banks in Russia in foreign currencies by Russian and not by foreigners. So its always starts with the local people, because local people always know best what`s going wrong and they start moving out. The speculators historically always show up later.

So there are Russian speculators that may be involved here too, or is this just the average bank depositor moving their money into dollars out of concern?

It seems pretty obvious that its intelligent people making intelligent decisions with their money, they can see there`s going to be problems with the ruble so they, intelligent Russians have been moving out of the ruble. The ruble is down 50 or 60% in the last few moths, or in the last year or so.

The Central Bank said today that they won't have to spill much blood to defend the ruble at 41, do you believe them?

I don't believe in any central bank no matter what they say. The few times central banks have been right at something, you can count them with one hand. If you get your investment advice from central banks or governments you are going to go broke fast, don't listen to those people.

Are you short the ruble?

I am not doing anything with the ruble, not right now. But knowing that the central bank drew a line in the sand it makes me stand up and take a little more notice about the ruble. So I will start thinking more about it."

For some of Rogers' recent commentary, check out his thoughts on British pound, on agriculture, on commodities, and more.

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