Monday, August 8, 2011

UK 'faces credit rating cut and more money-printing' - Telegraph.co.uk

Jim Rogers said he had long positions in agriculture, gold and other commodities and was short on emerging market stocks, government bonds and US financial institutions
Mr Rogers said it was crazy to think that the US could be downgraded while countries such as the UK and Spain escaped a rating cut.

“The idea that the US is downgraded and the UK is not is lunacy,” he told Reuters. “There are many countries – Belgium, Spain, lots of countries in Europe – that should be downgraded just as the US has been.”

Mr Rogers’ comments came after Standard & Poor’s downgraded the US’s prized triple-A credit rating late on Friday of last week, an action he claimed had been too slow in coming.

The recent sell-off of shares on global stock markets has been prompted by moribund economic growth in much of the Western world, a trend Mr Rogers said was likely to lead governments to restart money-printing programmes.

“They’ll try to disguise it. They’ll call it cupcakes or who knows what,” he said. “It’ll cause a big rally in raw materials and commodities because more and more people will realise they are printing money, and debasing the currency.”

Mr Rogers’ comments are a reflection of his investment positions. The Quantum Fund co-founder, who worked alongside the renowned US financier George Soros in the 1970s, said he had long positions in agriculture, gold and other commodities and was short on emerging market stocks, government bonds and US financial institutions.

While he suggested Western economies would experience tough times in the coming months, he welcomed actions by the Chinese government to cool its economy.

“Is it going to be fun? No, some real estate investors are going to go broke in Shanghai and other parts of China,” he said.

“But that’s not the end of the world, that’s not the end of the Chinese economy. Things may slow down but China’s not going to fall off the face of the world.”

Jim Rogers

Warren Buffett

Nouriel Roubini