Continuing the Fun & Games - Watching the World Economy

Wild gyrations on world stock markets, advances in the price of gold, downgrades in the credit rating of the USA, a crisis in Greece and other European countries.... It makes for interesting times.

I just finished listening to a podcast from the BBC World Service (Business Daily) for August 26th. One of the interviews was with Jim Rogers, an American investor and financial commentator and one of the founders of the Quantum Fund with George Soros. What little I've read about him doesn't convince me that I'd agree with all of his views, but it's hard to argue with success. So, what did he have to say?

The next decade (or two or three) may be lost to an economic downturn. He pointed to Japan, which has gone through 2 such lost decades. In his view, the USA is in a far worse situation, being not only the biggest debtor nation, but the biggest debtor nation in history. Asia (China, etc) owns most of that debt.

As the 20th Century began, the advantage moved from the UK to the USA, a move, he says, that was exacerbated by a financial crisis and mistakes by politicians. As we move into the 21st Century, the advantage is moving from the USA to Asia, a move exacerbated by a financial crisis and mistakes by politicians. Sound familiar?

When asked what American politicians could do, he suggested perhaps an education about the world and their role/place in it. Cutting spending would be crucial. The USA has military bases in 120 countries and those bases were put there by politicians. These bases are making things worse for America. He feels that the USA needs to get a more realistic view of it's place in the world, much as the UK did as their world empire began to collapse a century ago. Sadly, if you follow any of the political comments by presidential hopefuls as the USA stumbles it's way to 2012, there is little evidence of any realistic views coming from anyone.

Despite any economic slowdown, he sees commodities and agriculture as the big opportunities of the coming decades, those and Asia (China specifically). Not that China hasn't/isn't making it's own mistakes (currency convertibility issues, among others...), but that's where he sees the dynamism in the coming years.

Interesting listening. I'm sure my financial friends will want to weigh in on this one.