Jim Rogers: global economy heading for a crisis

published 13 May 2016

Jim Rogers, the Singapore-based investor and author who co-founded the Quantum Fund with George Soros, is very pessimistic about the global economy. "The world is going to have serious problems because of the massive build up in debt over the past eight years," he tells Truewealth Publishing. The outcome will be more severe than the last crisis and America will be at the epicentre of the disaster, because the Fed's balance sheet has grown more than sixfold since 2008. Consequently, he is shorting the US stockmarket, which remains near its all-time highs.

Nonetheless, Rogers is long the US dollar. His rationale is that "in times of turmoil" the greenback "has been the best place to be when things go bad". Still, he worries that "at some point, the US dollar will be overpriced", so "if it goes into bubble territory, it will be time to sell". In that case, he'd focus on gold, because it has "preserved its value over long periods of time".

Rogers doesn't think Asia will escape the downturn. "In 2008, Asia had saved a lot of money for a rainy day. But now, much of that has been spent. And China has a lot of debt now. It's going to be worse this time." The impact of any crisis could be magnified by a possible house-price crash, since "a lot of real estate is overpriced, in Hong Kong, Singapore and parts of China". He would "avoid buying real estate in much of Asia", but he believes that Chinese stocks are cheap and should be a good long-term investment.