Jim Rogers Giving Clinic on Identifying and Solving Economic Crisis Part 2 of 5

Points covered in video:


Paulson and Bernanke either incompetent or lying

Wrong every time they open their mouths

Washington a place where they aren't accountable for being right or wrong

People not credit worthy in many cases bought several houses with no money down

Banks started doing the same with car loans, credit cards and student loans

With those excesses, something will have to give and get cleaned up, government won't allow the cleanup

Don't need more regulations, have enough

Regulated companies causing problem

Alan Greenspan has said derivatives are good

If Greenspan had let people fail in the 1990s, we wouldn't be going through problems we are today

Incompetent would have been gone

He wouldn't let them fail then, as they're not letting them fail today

So incompetent will remain

Refused to let free market work and intervened by not allowing them to fail

Greenspan was vastly overrated - part of the problem

Bernanke doesn't understand markets or finance

People must be held accountable by allowing them to fail

Have to be allowed to learn from mistakes, not be propped up in spite of them

Part One Part Two Part Three Part Four Part Five

Henry Paulson Announcement Sends Investors Fleeing to Safety

With traders and investors in a risk-adverse mode, anything they're unsure of sends running for safety and cover, and it was no different today.

When U.S. Treasury Secretary Henry Paulson announced the Troubled Asset Relief Program (TARP) would now be adding those in the nonbanking sector to their focus, investors fleed to the U.S. dollar and yen for protection.

The underlying assumption being made was things may not be as fixable through TARP than they orginally thought, and unexpected problems may be hindering the effort.

Right after Paulson's remarks went across the news wires, the stampede to the yen and U.S. dollar began.

The dollar and yen remain the investment of choice for those seeking safety, although the yen is getting more activity and holding strong, as the dollar fell Wednesday to 94.61 yen from 97.60.

Jim Rogers: Government Bailout a Huge Mistake

Going back to the time of former Fed Chair Arthur Burns, Jim Rogers said the idea he had that nothing should be allowed to fail is rearing its head again in the current economic climate in Washington.

Further, Rogers called the bailout plan by Treasury Secretary Henry Paulson "astonishing, devastating, and very harmful for America."

Newt Gingrich concurred saying, "I think you have a Goldman Sachs chief of staff to the President and the Goldman Sachs secretary of the Treasury, and they convinced the President that the American people ought to send $700 billion to Wall Street.

"I think it's a very, very bad idea, and I would argue a very un-Republican idea. I don't understand what they think they're doing."

Rogers added that it's "embarrassing" to watch the scenario unfold, as it reveals how little not only the Bush administration misunderstands economics, but both presidential candidates as well.

As far as Rogers' investments, he's been moving money back into Chinese stocks.