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Sunday, March 02, 2008

Quantum's Jim Rogers says US 'out of control'

The case for commodity stocks has been forcefully, and in my opinion, quite correctly expressed by Jim Rogers, co-founder of the Quantum Fund. While sharp corrections are possible at any time, Rogers is taking a longer term view.

Especially alarming is his thesis of armed conflict over resources. But of course we have already experienced this; the U.S. invaded Iraq to secure the desperately needed oil resources of the region. To the conservative neocons** out there who insist that we selflessly sought to bring democracy to Iraq--well, Karl Rove appeared on Fox News on Sunday (3/2) as an analyst to point out that the U.S. could not allow Al-Qaeda to build up a base in Iraq because it would endanger our oil supply.

**The Wall Street Journal, for example, has written many silly, disingenuous editorials about this county's putative motives for invading Iraq; e.g., the invasion was not about oil but only about the fact that Saddam Hussein was a 'bad, bad man & killed many of his own people' & the U.S. is so selfless and pure that it was a moral imperative for our 'Dear Leader' to send its imperial armed forces to Iraq in order to topple him. As if siding with dictators with blood on their hands ever bothered Amerika; re Stalin, Batista, Franco, Shah Pahlavi of Iran. Not to mention supporting Saddam against Iran in the almost decade-long war in the 1980's and selling him much of the chemical weapons technology he later used to kill his own people (along with France & other European countries).

Memories tend to be quite short in the U.S.A.--as short as attention spans...

From the London Times Online (2/28/08):

And he also warned that it “made sense” if global competition for resources ended in armed conflict.

Mr Rogers told delegates to the CLSA investment forum that the prices of all agricultural products would “explode” in coming years and that the price of gold, which hit an all-time high of $964 an ounce yesterday, will continue its surge to as much as $3,500 an ounce.

Gold would continue to rise, the analyst Christopher Wood told fund managers, “because it is the exact opposite of a structured finance product”.

In a blistering attack on US monetary policy and the “helicopter cash drop” responses of the Federal Reserve, Mr Rogers described the American dollar as a “terribly flawed currency”.

He said that the plan by Ben Bernanke, the Fed Chairman, to “crank up the money-printing machines and run them until we run out of trees” had exposed America’s weakest point to her rivals and enemies.

The dollar may have declined recently, he added, “but you ain’t seen nothing yet”.

Talking to a room almost exclusively populated with Japan-focused equity investors, Mr Rogers recommended an immediate language course in Mandarin and a switch into commodities — the second-biggest market in the world behind foreign exchange.

Mr Rogers said that historic drains on wheat, corn and other soft commodity inventories have created market dynamics that could lead to severe food shortages.

The outlook over the next two decades would see prices of everything from cotton and sugar to lead and nickel “going through the roof”.

Heavily playing down the prospects of a big recovery in Japan, Mr Rogers said that the country’s demographics — as the fastest-aging country in the world — would cause it greater problems and an ever-diminishing quality of life for ordinary Japanese.

But he also said that other countries — including Britain, Italy, China and the US — should take note of what their own demographics would look like without the effect of immigration.

“Japan will be the perfect laboratory for the world to watch how a demographic crisis plays out,” he said.

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