SINGAPORE – When Gordon Brown said that he wouldn’t be dictated to by “a few speculators who want to make money out of Britain,” he was talking about Jim Rogers. Peter Mandelson called Mr Rogers “foolish“.
Those were understandable responses to Mr Rogers’ assertions that post-oil-and-credit-boom Britain “had nothing left to sell” and that “sterling is finished”.
On the way back from my trip to China, I decided to pop in on him in Singapore, and find out if he was a maestro or madman. He moved out to Singapore ostensibly because he wanted his young daughters to be children of the East.
I think whatever one thinks of his gloomy prognosis, he does raise a vital question that I can see no politician answering at the moment. What exactly is the business plan for UK plc?
We were hugely dependent on financial services for taxes, for value-added jobs, and secondary service-sector employment. If British banks are to “become boring again”, if the FSA is to adopt intrusive aggressive regulation, then I don’t see much of the financial wizardry that drove the city returning quickly.
Watch Faisal Islam’s interview with Jim Rogers
There’s now a consensus that the credit boom was caused by the additional lending from “non-traditional lenders”. Most of that money came from abroad, from America via complex securitisations.
Even as the conventional banks increase their lending that other source of lending has disappeared, and still not reappeared. Can the government really step into this market and replace the lending power of those (basically foreign) sources of lending that have gone away?
So nor do I see the debt-fuelled consumption economy returning quickly. What does a post-credit crunch British economy look like? Jim Rogers cannot see it (though he suggests I might like to retrain as a farmer).
He has concerns about the US too. In my interview he memorably refuses to refer to the US and the UK as “rich countries” on account of their reliance on foreign creditors. He invites someone to fly from China, Hong Kong or Singapore to New York’s JFK and describe which was the “third world” country.
It is really uncomfortable stuff. But you are left wondering: “what if he is right?”
We spend billions of pounds making contingencies for bird flu, and for terrorism. Is anyone planning for Britain’s economic security?
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I can’t help but agree with him. As much as I don’t want to see the UK economy stagnate, what do we have to offer? We are a debt ridden country – what is so great about that? And now with all our production lines shutting down, is there a true future for the wealth of Britain? I agree, we should become farmers, good quality earth is something we do have. However, I can’t help but feel that climate change will have its way with us before any of this messy economy business is sorted!
What if Jim Roger is right? God helps us.
Excellent interview and a relief to hear a different view. That we are keepin those that failed – afloat – is indeed ludicrous. At what point do we stop throwing money at a problem based on the mis-handling of money?
The answer isn’t easy – but it is clear that the way our government is handling the situation is doomed to fail each time.
I wonder how many times they will try the same answer before realising it is the wrong one?
Dear Faisal,
Please, please, please read some Austrian economics, I’m begging you. If you are already familiar with the Austrians, please read them again. It would make your questions so much more uncomfortable for people to answer. I’m not referring to this interview particularly, but your interview last night with Mervyn King was in desperate need of some non-Keynesian perspective. Oh how he would have squirmed! Same goes for Mr Snow in his interviews.
[...] interesting geopolitical pontification from Jim Rogers on the Channel4 website. Now Jim is an irritating man; one of those guys prone to [...]
Faisal,
Rogers in his inflamatory (can i sell a book?) fashion gets several things wrong as he hypes the UK imminent default and collapse. He does not seem to understand that the size of UK banking sector assets is NOT a sovereign (or quasi-sovereign) liability. As a global financial centre (unlike Switzerland or Iceland) a large proportion of assets in the banking sector are the libability of non UK Banks. This makes his often quoted comparison to Iceland totally misplaced. In addition he seems never to look at the NET position, simply the most dramatic and ambulance chasing number he can find.
Rogers called for an ongoing bull market in commodities as the value of his commity index fund and the CRB imploded.
I think his critique of UK finances has as much credibility as his unending fantasies around commodities going up forever.
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