It’s always worthwhile to listen to what legendary investor
Jim Rogers has to say. Recently, he offered some comments on China, Russia, the
Crimea and the dollar.
He is long Russia and China, but is not investing in the
Ukraine. Contrarian investing does not oblige you to invest in just any basket case.
In the diplomatic pas-de-deux between Barack Obama and
Vladimir Putin, Rogers believes that Putin came out on top:
Unfortunately
America seems to have really bungled this whole thing very badly. As you know,
they’ve tried to instigate a coup in Ukraine against an elected government, and
they did that somewhat successfully, but then they didn’t think through the
consequences. Mr. Putin seems to have outsmarted us, Putin now is in control of
Crimea, which Russians have controlled for many decades, so that’s not so
unusual – what’s unusual is that America didn’t think through what they were
doing, they seem to just react on a day-to-day basis, so now… Crimea is part of
Russia, the Russians have more and more allies in Asia. I’m afraid America just
didn’t think it through, they’ve bungled, they’ve acted on a day-to-day basis,
and they’ve reacted to events instead of looking to the future and controlling
events. Mr. Putin seems to have outsmarted Mr. Obama.
America failed because the federal government is incompetent:
Because
we have incompetence in the State Department, in Washington. I guess they
thought that they could take over control of Ukraine, which will give America
more influence in central Europe and would certainly damage Russia, but in the
end it seems to have strengthened Russia and has damaged America. You know,
politicians make mistakes; bureaucrats make mistakes all the time. Looks like
this time it was America that made the mistakes, and not Russia.
But, some people, like George Soros suggest that America
should supplant Russia as supplier of European gas. That will teach Russia a
lesson, won’t it?
Rogers offers a sobering assessment:
America
says it could, but it would take a long time for America in order to get
natural gas from America to Europe. You don’t just sort of snap your fingers
and do that. You don’t just put in on a boat or plane, you’ve got to have
special ports on both sides, you’ve got to have special ships, and you’ve got
to have natural gas in the right place. Yeah, it could happen someday, but some
day is a long time away, and if Russia stops selling natural gas to Europe –
that’s going to hurt Europe for several years until American gas can come, and
that if we presume and suppose that there is enough American natural gas to
ship to Europe. Europe uses a lot of natural gas, and America at the moment
seems to have surplus of a natural gas - will they have a surplus in five
years? I don’t know. Will we have enough to supply Europe gas for many years? I
doubt it.
And then there is the almighty dollar. As America sanctions
foreign governments, more of these governments are choosing not to use the dollar a medium of
exchange. Few people seem to be discussing how our diplomacy is implacting the
dollar, so Rogers is worth hearing:
At
the same time, as you know, Russia and China are now going to trade with each
other in their own currencies instead of the US dollar. More and more people
are doing the same thing, they’re starting to trade in other currencies besides
US dollar. This is just a continuing long-term move away from the US dollar.
And, I am afraid, that US is pushing people away from the US dollar with our
actions.
This threatens the dollar’s status as the world’s reserve
currency. Rogers explains why it matters and why we should be worried if the
dollar loses that status:
The US
has been the world’s reserve currency, has had the world’s medium of exchange
and so far we’ve been able to do a lot of things because we can just print more
US dollars. We have a huge balance of trade deficit; we have huge government
deficits, because we can print more money. If there comes a time that we cannot
print money, when the world will not just take US dollars because we say “here they are!” – then
that cripples America in many-many ways. The Pentagon, the Defense Department
of the US has already said that the deficit in the US is a major potential
weakness from the military point of view. Just recently, the space people said “every country in the world has
eventually collapsed” and the way America is going, we might
collapse too. This is not me, this is the Defense Department of America, and
this is the Space Agency of America saying these things. If you read history,
Sophie, it’s true, it’s correct. When people do not have the money that they
used to have – they’re limited in many ways. You cannot have as many soldiers,
you cannot have as many airplanes, you cannot send ships all over the world,
because somebody has to pay for it, and if you don’t have the money to pay for
it anymore, you’re in trouble.
Yup, Barry & His Posse bungled the gig. Putin is smarter than them, and has actual real-world experience.
ReplyDeleteGas: B&HP don't like gas, oil, coal; don't want it extracted; don't want it sold. No nukes, neither.
Washington has been stonewalling LNG ports for decades. First it blocked ports for importing gas, and now it blocks ports for exporting gas.
ReplyDeleteFracking has advanced because it is largely under state jurisdiction. Coastal ports, however, are under the feds.
I think that the idea the US was "engineering a coup" in Ukraine is somewhat wide of the mark. It also underplays the serious, long-term ethno-linguistic divisions in Ukraine.
ReplyDeleteThe last competent committed Pres. was GHW Bush. Clinton was/is a genius, but it's all about Bill.
ReplyDeleteI was astounded at the ignorance, incompetence, sheer folly, and recklessness of our leaders post 9/11. I still am.
Putin is a shrewd Bismarkian. We're sentimental utopians.
"Most (many?) WW 2 service people didn't add value". D. Rumsfeld (he apologized next day, of course) -- Rich Lara
Fairly bizarre statement by Rogers: "Just recently, the space people said “every country in the world has eventually collapsed” and the way America is going, we might collapse too. This is not me, this is the Defense Department of America, and this is the Space Agency of America saying these things."
ReplyDeleteNot clear what expertise either NASA or DoD has in analyzing the rise and fall of civilizations. Indeed, the study to which he is referring was NOT a NASA-directed study: it used some software tools that NASA had developed, and they supplied partial funding for it, but explicitly stated that the study : ""was not solicited, directed or reviewed by Nasa. It is an independent study by the university researchers utilizing research tools developed for a separate Nasa activity. As is the case with all independent research, the views and conclusions in the paper are those of the authors alone. Nasa does not endorse the paper or its conclusions.""