Monday, April 26, 2010

Jim Rogers: Sovereign Debt Risk

While politicians have used the disfavor of the financial institutions around the world to focus on regulating the industry, which is of course another way of saying they are trying to make it look like they're doing something, the real issue, according to investor and commodity expert Jim Rogers is the sovereign debt risk we all face.

The reasons politicians don't want our focus too much on this is it starts to hit too close to home that the central banks and government financial institutions are behind the extraordinary risk we now face of debt default of nations, which dwarf the banking industry.

What it would unveil is the outrageous practices of the government and socialist around the world who continue to cater to the entitlement fantasies people have been taught to expect the governments to provide them with.

Workers in Greece are basically protesting because other countries in the European Union are pressuring their government to quit doing that very thing, as it results in the people of other nations having to bail them out for all the unbelievable perks they're given as to what they think life owes them.

As many entrepreneurs and believers in free markets know, the redistribution of wealth eventually runs into a brick wall, and that brick wall is there is no more money to legally steal from the productive. Essentially, that's what's happening in Greece through pension and health plans, along with wages beyond what the market can support.

Those people who attempt to make it look like a bailout of Greece is a standalone event are either delusional or outright liars. Who in their right mind doesn't know once Greece is bailed out that Portugal, Italy and Spain will be right behind them, and possibly Ireland.

The soft underbelly of the redistributionist, socialist, progressive dragon has been revealed, and it's vulnerable and it's ugly.

As Jim Rogers points out, why are we focusing on banks rather than the practices of governments. The risk we face is with entire governments collapsing. A bank is almost nothing in comparison with that. How many banks after all are larger than Greece? And they're just a small fish in the pond. Wait till the other beggar nations come knocking on the European Union door. Then the clueless will begin to understand what it is we face, if they're willing to tear the mask off of it and call it like it is; especially the mainstream media, whose coverage is so slanted and clueless it can't be trusted in that regard.

Rogers also continues to point out the days of the power of the huge financial institutions are over anyway, and as far as investing goes, we need to focus on those who produce real things, like raw materials and agricultural. That's where the economic power and investment opportunities are shifting, and as he always notes, those who make the money in the future will be the farmers.

Or I would add, those who invest in commodities and real stuff will be those who make the money.


Anonymous said...

"socialists" not "socialist" around the world... If you expect people to listen to what you write then you should learn how to do so...

Robert M. Fulton said...

Sure, live and learn, buy Viterra.

Paul said...

You've got to be kidding me. You supposedly read the entire article and your critique came down to pointing out the author left off a letter at the end of a word. Where would we be without your insight?

Paul the Cab Driver said...

Unfortunately, most people around the world are woefully ignorant of economics, and they believe the socialist fairy tales. It is going to be very tragic when the fairy tale turns out too good to be true. Reality unmercifully follows her own rules. We can either truly study these rules and live by them, or we can make up deadly fairy tales, and kill ourselves.

Anonymous said...

It will take a currency bust to fix Greece.
The only way that will occur is if Greece is forced into using its own currency. They will have to be excluded from the Euro.
The same goes for any other country that abuses the Euro. The books have to balance.
Spain, Italy, and Greece will have to be called to accounts. Otherwise the Euro looses all credibility as a currency. The books have to balance or the currency goes down the tubes.
The same can be said of the American Dollar. It is time to put a competent businessman in the White House and balance the books. We may be looking at a dollar worth 10 cents on the dollar in the near future. That did happen to South Korea in the 1960s. The entire currency went bust. History repeats itself. Especially if the fools do not learn from history.

Anonymous said...

omg, I saw two spelling mistakes in that, I'm not listening: lalalalalalala

Anonymous said...

"redistribution of wealth eventually runs into a brick wall, and that brick wall is there is no more money to legally steal from the productive..."

uh, you mean as proven by the grim reaper of "Mathematics Of Rule"? Duh...

Its so bad that the "real" value of fiat (based on misplaced trust) currency is tending to zero, as it has, repeatedly, for all of history.

Anonymous said...

Instead of having Greece leave the Euro, why doesn't Germany (and possibly France) leave instead to make their own currency. They will quickly find that all of the manufacturing which they have pulled into their countries to produce products will very quickly be unaffordable by their neighbours and jobs will leave en masse back to the other Euro countries.

For some reason, everyone keeps blaming PIIGS for the problem, while never realizing the boon the Euro became for Germany and France. And obviously, now that it's time to pay the piper, these two are complaining the loudest.

How about looking at it this way...

Germany and France needs to 'pay-off' PIIGS by giving plenty of socialist euro-dollars, or they can kiss their manufacturing base goodbye. After destroying the small manufacturing bases in all of these countries (making them utterly dependent on the EU), they still need to provide the same standard of living as when these bases still existed.

What did you expect? That you would destroy the manufacturing bases and expect people to live like farmers in Bangladesh in these countries?

Being from a country which is in negotiations to enter the EU, I can tell you that my government is being forced to pass laws which are detrimental to my country's future. One example is where currently no one is allowed to plant any new orchards (mustn't compete with those fine jams from France must we?)

As far as manufacturing goes, we will probably be relegated to the backwaters of Europe. Well guess what... if those are the rules we have to play by, then you better expect there is going to be plenty of Euros to make up for these losses.

The funniest thing is that in the EU, frozen meat (beef, chicken, pork) cannot be sold if it is older than three months. So countries like Germany end up importing fresh meat from my country and forcing us to sell their old meat which is anywhere from 6 months to 2 years old since we don't have any such laws on the books. And the EU will make sure such laws stay off the books until we join the EU.

For any of you imagining that the EU is some kind of utopia... think again. The Greeks are doing the right thing. After sacrificing everything for the EU, they are now being told to starve and make due with less. Why? So that the execs in the bigger countries can keep getting their fat paychecks?

I just hope my country smartens up and just decides to walk away from the talks on joining.

abprosper said...

Good article with only one major flaw.

The current technological and economic systems give far too few people an opportunity to be productive to really end the socialist edifice we created safely.

Look at how many people in todays modern world actually perform any kind of useful labor that pays enough to effectively consume.

without state support, the modern produce/consume system would collapse of demand drought.

Its fixable certainly if the businesses "conspire to hire" but if they don't people will turn to the state sector for support. You will be socialized

If thwarted, well the consequences will be even worse. If people have too little gain from you and too little to lose, they aren't going to respect any claims of rights any more than they did in the Rwanda genocide.

I'd suggest in fact that the enlightenment idea that you even have inalienable rights is largely the greatest flaw in the thinking today. The fact is a person only has what rights they can defend or get others to defend for them.

When the social fabric erodes too much, you are meat.

For people in the US the threat is even greater too. we have many weapons, much information and unlike the broken dwellers in the global favella system used to be well off.

Thats a dangerous mix and unless the business community finds some way to distribute wealth without the state or maybe goes to a citizens wage in a few decades I fear they'll be socialized, dead or in hiding.

Anonymous said...

Land, water, shelter, food, firearms, ammo, gold, silver, oil/fuel, tools, family & friends.
If you don't have them you're going to be one of the zombies blaming everyone but the man in the mirror for your woes.
That's right... You go on vacation, I save. You buy a big screen, I keep my 27 incher and save. You eat steak, I eat ramen noodles and save the difference. You buy a new car, I keep my rust bucket and save.
And now 3 years later I'm the bad guy because I don't agree with your representative extorting business owners to support your previous stupid choices.
Its not fair.

Anonymous said...

If the IRS made a mistake and refunded not the one thousand I claimed but one million, would I get to keep it all? Sure, the government would simply tighten controls and adopt new procedures to prevent future mistakes. That's what is happening with congress and the president. No one even mentions restitution! Fraud has always been illegal. Unjust enrichment is not criminal, but is a clear basis for action to recover the billions now being posted as profit by the "rescued".