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Crystal balls are cheap; good advice will cost a little more
   “My suggestion is that people should move to Asia; and teach their kids how to speak Chinese,” says Jim Rogers, the man who made his name, and fortune, betting against Wall Street in the 1970s. In 2007 he took his own advice, moved out of Manhattan and set up shop in Singapore, where both his kids are learning to speak Chinese.
    The author of several bestselling books, including A Bull in China, Rogers remains bullish about China and, as he says, “countries that are going to benefit from the rise of Asia, such as Australia.” I recently met with JIM ROGERS at his home in Singapore.
    It’s 29 degrees Celsius, humidity has just edged past 93 per cent and Jim Rogers is at home pedaling away on his exercise bike. “That’s the tropics,” he says, “It’s hot and it rains.” Within five minutes a torrential downpour arrives to underscore his point.
    His Asian admirers, of which there are many and the numbers grow daily, would say he even gets the weather forecast right. There’s no iPod, instead a laptop computer is specially mounted on the handlebars, so he can keep an eye on the market he’s so keen about.
    In 1988 Rogers became the first westerner, possibly the first person, to ride a motorbike across China. Twice more he did it, on motorbike in 1990 and, with wife Paige Parker in a car in 1999 — on a round the world journey, that included five and a half weeks traveling, west to east, across Australia.
    “These trips brought home to me,” he says, “that China was not a communist country. They were not horrible bloodthirsty people, they were extremely hardworking people. Despite what they called themselves, they were capitalists.”
    Four decades ago — in the home of modern capitalism — Jim Rogers partnered with George Soros to establish one of the most successful hedge funds of all time. “A couple of us started a fund and it was successful,” he says, sounding almost embarrassed about that success.
     The Quantum Fund wasn’t just successful; over the decade in which Jim Rogers was involved the S&P 500 advanced 47 per cent — while Rogers and Soros managed returns of 4,200 per cent.  
    “In 1974, there was something called the Nifty Fifty,” Rogers says. “They were supposedly the fifty great stocks that would have rising earnings forever. They all sold at huge multiples of their earnings, they were just very, very expensive stocks and we shorted a lot of them.”
    Rogers, who today mainly invests in commodities and currencies, again began shorting stocks about a month ago.  
    In 2010, his assessment is that China and America are heading in different directions. The big difference is the direction in which they’re headed.
    “China is one of the best run countries in the world right now,” he says, “and that’s just based on results. They call themselves communists but they’re amongst the best capitalists in the world.”
     China has many problems, he freely admits, including a blocked currency which has helped create an internal property bubble as increasingly wealthy investors have few options for parking their funds.
    But, he argues, the problems of the United States are far greater. Rogers has been a strident critic of America’s massive bailout packages; and of the bailout’s architects and beneficiaries.  
    “Karl Marx is probably dancing somewhere.” he says with a grin. “Because, in America right now, the government owns the automobile industry, the insurance industry, the mortgage industry and the banking industry. The government suddenly owns huge parts of the American economy — that’s what Karl Marx said he wanted and he didn’t have to fire a shot.”
    As for Australia, he says, “The only disappointment I’ve had is that your politicians are as bad as the ones in America. If the Australian Government keeps running up such gigantic debts, the lucky country is going to run out of luck.”
    Rogers, who supports neither side of politics in America, is highly critical of the Rudd Government’s spending policies; and sees no logic behind its decision to impose a super-profits tax on the resources sector. “Further taxing resources is not going to bring out new supply so it will hurt us all in the long run,” he argues.      “Do you think politicians are going to find new supplies, much less develop them?
    “If your government insists on taxing the golden goose, it should at least pay off debt so when the bad times comes Australia will suffer less.”
     But Rogers, marks the Reserve Bank under governor Glenn Stevens, with praise. “I wish your central bank was running the US Federal Reserve,” he says bluntly. “Your guys have done a much better job than most other central banks. I didn’t say they’re doing a great job, still it’s a much better job.”
    “They (the RBA) see what’s going on in the world. Yes, they have the advantage of a strong economy, but at least they’re doing the right thing, instead of denying reality.”
    And he applauds its tightening of monetary policy. “If anything, I think rates should be higher because there is inflation in the world and Australia could be developing its own property bubble.”
    While higher interest rates will push up the value of the Australian dollar, Rogers says it would be foolish for policy makers to forget how our dollar dived towards fifty US cents, less than a decade ago. “If the Australian economy keeps taking on debt the next time there’s a bear market in commodities the Australian dollar will collapse,” he says.
    And he sees a bleak future for any currency backed by massive debts. Top of his list of bad currencies is the, once mighty, greenback. For which, in great part, he blames, former US Federal Reserve Chairman, Alan Greenspan.
   “In 1998, Greeenspan bailed out Long Term Capital Management’s (the US hedge fund with over $5 billion debts;)creditors then he bailed Wall Street out again in 2001 because of the dot com bubble — the bubble he caused because he kept printing money and bailing out everybody in sight.”
    Rogers points to Japan, which he argues spent two decades bailing out what he calls “zombie banks and zombie companies.” Pointing to the Nikkei Index — which peaked around 39,000 points in 1989 and today is trading below 11,000 points. He says, flatly, “Bailouts don’t work!”
    Total US government debt is now around 90 per cent of GDP. “Next time we have a slowdown, or a recession,” Rogers asserts, “America has shot its wad. Ben Bernanke (US Federal Reserve Chairman) can’t keep printing money — the world is going to run out of trees at the rate he’s printing money.
    His negativity about the British pound is based on similar concerns. While he calls the euro a political currency, which the architects of the Treaty of Maastricht got right; but the nation’s of the euro zone got wrong by ignoring their own rules.
    “Greece is bankrupt.” he says, “whether they acknowledge it or not. Greece should have been made to take its pain otherwise it will never change. In five months, years or decades later we’re going to be having the same conversation only worse.”
    And of the euro-zone’s latest bailout package? “The idea that you can solve the problem of debt and consumption with more debt and consumption, defies belief.”
    But Australia, in the short to mid-term should remain a land of opportunity, with plenty of opportunities on the land. “I would urge anyone to buy a farm,” he says.
    “Farming has been a horrible business for 30 years, so there are fewer farmers and supply is under duress. At the same time all of Asia is becoming more prosperous so you have demand going up when supply is under pressure.”
    And, whilst he may not have too much time for our politicians, he likes Australians and would like to see more Australians. “If I were Australia, I’d be doing everything I could to bring in people and capital to develop the lucky country.”
    As for foreign investors? “I would give them tickets to enter, because you want capital and expertise. Australia was developed mainly by immigrants, I mean, how many fifth generation Australians do you know?”
    His recipe for Australia is that it should leverage off Asian growth and stick to what it’s good at. However, Australia will not be prepared for the next economic shock and for a commodities bear market, if it keeps taking on debt.  
    He may be one of the investment world’s best known Sinophiles; but he’s not an apologist. “Don’t think I have starry eyes about China, it will have a lot of setbacks along the way, as did America. During the 19th Century America’s had a horrible civil war, we had fifteen depressions, we had periodic massacres in the street and, at times, very few human rights.
    “Plato in ‘The Republic’ said that the way societies revolve is that they go from dictatorship, to oligarchy, to democracy, to chaos and back to dictatorship.” China, according to Rogers, is in the early stages of oligarchy. And, America, if it’s not careful, is heading for chaos.
     In 2009, Chinese journalist Yang Qing spent many hours following Jim Rogers around, interviewing him for her book The Crystal Ball, about the Rogers investment philosophy. Chinese media reports say it flew off the shelves once it hit the bookstores. Often people would buy a dozen at a time so they could distribute copies to friends and colleagues.
    The book is only published in Mandarin, he is happy to wait until his daughters, aged 6 and 2, are old enough to read it to him.
    In the meantime he sticks to his maxim. “Most people are wrong most of the time. That’s not great insight; it’s been proved millions of times.” And on that point Jim Rogers is certain he’s got it right.