jimmy was on cnbc last night. believe it or not he just became a daddy. the old guy gets it done in more ways than just the market.
I remember when Jimmy Rogers was on CNBC, and I cant remember seeing him since about 1998, when it turned into verifiable bubblevision...Essentially, he was always skeptical, cynical, filled with alot of realism that embarassed the anchors, and quite possibly, alienated their audience...He typically has valid arguments and does not go into the ridiculous hyperbole that Kudlow has now become famous for...Kudlow is there for one reason...He is there to give the appearance of an intellectual with his highbrow mannerisms, while giving the audience its verbal prozac...Its a complete circus act...
I haven't heard Jim Rogers latest but I sure get the feeling Greenspan is bluffing. 1) His trips to the white house were way up before the last FOMC mtg. 2) Bush is in panic mode over the economy. It must be better before the next year election or his chances are way down. His character strikes me as re-election is everything and his recent actions seem to confirm this. 3) PPI is way up, esp Int. PPI. CPI has more than doubled since last summer. A quick glance of the last 10 yrs seems to appear to me that the core is lagging the broad inflation measures. Perhaps the increasing production costs are abosorbed until it's no longer possible anymore would explain this pattern/theory. 4) A falling currency does not fit in with deflation. 5) Most leading inflation indicators such as ECRI's point to steady inflation at the current levels. However, the threat of deflation temporarily allows fiscal & monetary stimulus and the odds of a strong economy or stonger economy increase the odds of re-election greatly. I remember reading Trader Vic being cynical in '92 about Greenspan's political motivations and lack of character. If Rogers see's the same it seems like it fits.
They say close to ten trillion bucks was wiped away. This will not come back easily. IMHO the only way Bush will get re-elected is thru terrorist attacks. This economy and the world economy is sick and Greenspan just might screw the world economies by his hit and miss. I must admit I don't know what I would do now.
I figure that Greenspan is playing the deflation card so that he had the political cover to cut rates more -- in a cynical move to get Bush reelected. Unless we are going the way of Japan, which I don't see, deflation should not be a problem.
Jim Rogers is a great read and seems to be a likeable guy on T.V. but he loves to talk his book like his good buddy Soros. He has been ripping on the dollar for years and if I had followed his advice years ago with respect to the dollar I would have lost bigl. Now he may be still be a good trader and he is a smart guy but he has been wrong about the dollar and the expected inpact of inflation on the markets since at least 98 probably 96 and maybe before that. I even think he is right (about our problems) but he was just way early and probably took more heat than most could stand and would probably still be very much in the read based on his previous dollar prognostications.
Rising commodity prices while the economy is slowing. Correct me if I am wrong, but isn't that Stagflation?
yes it is "stagflation", absolutely correct. We just had a boom, and without Fed intervention and massive deficit spending, we would now have a Bust, i.e. deflation, and then Bush could go down in history like Herbert Hoover. Bush and Greenspan know this, and they are just doing what they have to do, no choice at this point the damage is done. Once things are stabilized ( and they might be stabilizing right now ), we will have slow growth along with increasing inflation; stagflation. Eventually we will have increased interest rates which will cause a recession, but that may not be for years. What is masking all of this is the increased use of cheap labor overseas, increased competition for jobs domestically, and prospects of cheap oil for at least the next few years. These factors could be enough to keep the CPI and PPI at "acceptable" levels that can be trumpeted in the press by politicians. However if you look at the prices for globally traded commodities, you will see the real picture.
Rogers thought Africa would be the next growth story due to its demographics and now he is really big on China because of its slave labor and low costs. Sure a company can relocate part of its operations there and make use of the wage arbitrage, but is anyone really earning a profit there? Outside of the regions around HK designated for the relocation of foreign owned operations, is business formation occurring? If China is really the new model of growth Rogers will have to explain how you can have innovation and entreprenuership without liberty.