Jim Rogers: Most U.S. Banks “Bankrupt”
Jim Rogers on Thursday called most of the largest U.S. banks “totally bankrupt,” and said government efforts to fix the sector are wrongheaded:
“What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent,” he said. “What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics…
Governments are making mistakes. They’re saying to all the banks, you don’t have to tell us your situation. You can continue to use your balance sheet that is phony…. All these guys are bankrupt, they’re still worrying about their bonuses, they’re still trying to pay their dividends, and the whole system is weakened.”
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Source:
Jim Rogers calls most big U.S. banks “bankrupt”
Jonathan Stempel
Reuters, Dec 11, 2008 1:53pm EST
http://www.reuters.com/article/InvestmentOutlook09/idUSTRE4BA5CO20081211
December 12th, 2008 at 3:03 pm
Rogers is a nut case…and I’m sending nuts to all my friends and family this holiday season. Go Jimmy!!!
December 12th, 2008 at 3:12 pm
I don’t know if Rogers is right or wrong, but is certainly feels to me that he is correct. We have been bailing out a lot of people for no reason other than their association with the current Sec of Treasury and they definitely are the same people who have nearly bankrupted the world with their astonishing recklessness.
If Madoff and the Gov of Illinois had better friends they’d be just fine now… they are doing nothing wrong by the standards widely practiced today.
December 12th, 2008 at 3:19 pm
Rogers is spot on you can go down the list of banks and most are insolvent..jpm, c, gs, ms, mer…why people continue to assign multi billion dollar market caps to these things is mind boggling.
December 12th, 2008 at 3:19 pm
Part of the problem with Jim Rogers is that he is too rigid in his opinions….and this cost him huge money this year…he hasn’t sold one shart of his China investments this year, at least in an interview a few weeks ago…and he also took a bath in commodities this time around….no, he makes the same mistakes all of us do….but he uses language in his interviews that is guaranteed to be caustic…
I wouldn’t want him for a neighbor.
December 12th, 2008 at 3:21 pm
shart is spelled share by most of you…
December 12th, 2008 at 3:24 pm
This should not be news it is common sense.
Giving money to the insolvent at the expense of the solvent is brilliant. Nothing like leveling the playing field. Only in America.
But at least the economy is fixed.
December 12th, 2008 at 3:26 pm
Bruce, your kidding me. You wouldn’t want a neighbor that lets you know that you have a robbing, mass-murder, next door. How foolish.
December 12th, 2008 at 3:32 pm
right or wrong I think he’s hilarious. He is definitely stubborn in his opinions, and sharply outspoken regarding his opinions which makes him great for media.
I’d love to see him in a two-way debate regarding things like commodities though.
December 12th, 2008 at 3:39 pm
> jason Says:
> But at least the economy is fixed.
You know, that can be read in more ways than one.
Just sayin’….
December 12th, 2008 at 3:39 pm
JTS,
w/ this:
JustinTheSkeptic Says:
December 12th, 2008 at 3:26 pm
Bruce, your kidding me. You wouldn’t want a neighbor that lets you know that you have a robbing, mass-murder, next door. How foolish.
no kidding.
ol’ JR is spot on. has been for years and years. And, Bruce, re: his China & Commod investments, note that JR isn’t offering ‘investment adice’ to the masses, just sharing his views..if, as Macke likes to say, “if you don’t have a crayon and a ruler, that’s your problem”, certainy not Rogers’..
and, anyway, when you fluff up the dates of those initial calls, he’s still miles ahead v. the SPX
December 12th, 2008 at 3:43 pm
Jim Rogers isn’t measuring his trades on a daily basis, like many of our brethren. He admits to being one of the worst market timers ever. But I happen to think he is right on a number of issues, including this one.
December 12th, 2008 at 3:46 pm
Okie
the ol’ Freudian slip
December 12th, 2008 at 3:47 pm
Call it the Paulson put.
December 12th, 2008 at 3:58 pm
God I hope Rogers is wrong on this one.
December 12th, 2008 at 4:00 pm
I have agreed, at least in principle, with a lot of what Rogers has said over the years.
I often disagree with him, however, on matters of market timing.
Right or wrong, I much prefer him to the endless parade of permabulls and sycophants that populate Wall Street.
December 12th, 2008 at 4:15 pm
But geez…I thought taking money from competent managers and giving it to incompetent managers was how the TARP and other bailouts (e.g., UAW’s) would save the US economy? Or, so I’ve been told. Rogers is such a curmudgeon, but a much richer one than I.
December 12th, 2008 at 4:29 pm
“What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people”
Are they funding the TARP via a tax on the competent bankers (wherever such animals may hide)? The rhetoric is great I just can’t connect it to reality. It seems more like they are taking the money from one group of incompetents (voters) and handing it to another group of incompetents (bankers). It would have been a lot easier to take if they had demanded that any company that got bailout money had to fire its (obviously) incompetent leadership and that any taxpayer money put into the company would have to be in the form of shares at market price.
December 12th, 2008 at 4:38 pm
And the new CEO should be given a salary of 500K/year and a bonus of 500K worth of stocks that would be put into a locked box for 10 years (government would have a lot of them). CFO’s and other top leadership could get similar deals. If they did a great job of turning the company around long-term they would be get rewarded – if not 500K is pleanty reward for trying. That’s called giving the right incentives.
December 12th, 2008 at 4:46 pm
>> We have been bailing out a lot of people for no reason
If I may offer a reminder, there IS a reason: to avoid reliving the 1930’s. A deflationary psychology is setting in. Does anyone want (a) tens of millions of non-agrarian people out of work and (b) for every company — even soundly run, profitable companies — that have more than zero leverage to sink under the weight of real debts in a strengthening currency? I think that’s what will happen if we don’t fight deflation with extraordinary measures.
That being said:
- I would *rather* the government print money and send it to all Americans — including the homeless! (who are as deserving as underwater homeowners) — on an equal basis than bail out the institutions that created the mess. BUT, my disagreement with their strategy does not make me forget why they’re doing what they’re doing.
- Even if we do these stupid bailouts, I like Shelby’s game. Gotta force the UAW and the bondholders to take haircuts. The taxpayers deserve a better deal.
December 12th, 2008 at 4:51 pm
@ wunsacon: Agreed, no 1930s.
Lots of haircuts coming, for all kinds of luxuries and non-essentials.
Bonfire of the Vanities, part deux.
December 12th, 2008 at 5:06 pm
Wunsacon; I agree. Those who think that we can just quickly dip into a depression and then magically everything will sort itself out and economic growth start its unstoppable flow from the buttom up, have not read their history books. It took more than a decade, and confiscation of gold, and tons of fiat money, and a world war, to get out of the last one. And all that wealth that could have been created by those millons of workers who were deprived of the opportunity to spend their time doing productive work, that was lost forever. But as previously said I also think we should bail out the consumer – after all that is the only way to get the GDP/economy going.
December 12th, 2008 at 5:09 pm
I would not be so quick as some of you about knocking rogers, he’s been wrong, for now, I don’t think, as leftback suggested, that his strategy was to buy China or commodities for this year.
In fact, I think I heard him make a comment on Bloomberg interview that not buying China now is like not buying the US in the early 1900’s.
Only time will tell if he is right or wrong but it’s too early too decide.
On this issue of the banks, why would anyone argue with him on that?
December 12th, 2008 at 5:24 pm
Hey, am I wrong or are people still displaced from NOLA by all the hurricanes? Maybe the GM money is better spend building shelter. Given the auto sales figures lately, it seems the world doesn’t want — or need — so many cars. Shelter is probably more important.
December 12th, 2008 at 5:46 pm
Jim must a little slow on the uptake if he is just figuring that out.
But slow or not, I think the guy is a goof, and I never take anything he says very seriously. Without Soros, Rogers would be nothing, IMO. How much is he worth these days? Anybody know?
December 12th, 2008 at 6:42 pm
JR is right. Banks are dipping into TARP money to fund their day to day operations. Without it, they would be tits up. Even after taking billions they still have not fully disclosed their off balance sheet assets. Banks are still not solvent and despite our cash some will fail before this is over. But hey, the government will not tell us where its spent our money either. Taxpayers are like mushrooms, kept in the dark and fed shit. Welcome to Free Market Capitalism..
December 12th, 2008 at 6:43 pm
Rogers said it best back when the original TARP was rolled out. Something to the effect “they should just go to the corner bar and leave the market alone”.
December 12th, 2008 at 7:44 pm
Jim Rogers if he werent so often correct, and in the company of knowlegeable, intelligent and competent people like Gerald Celente, Nassim Taleb, Nouriel Roubini, Marc Faber, Peter Schiff, James Kunstler, Michael Panzer, Bill Bonner, etc, etc ad nausem who have been predicting for years exactly what is coming to pass. “One has a choice, you can curse the darkness, or light a candle.” The preceding list of people have provided the candle.
December 12th, 2008 at 8:32 pm
If only we repealed the CRA, then the banks would all be fine!!
@wunsacon, people are still displaced by Katrina. My daughter is going down there to work on a rehab project……….
December 12th, 2008 at 10:14 pm
Jim Rogers is very colorful and entertaining. I have followed him for years I have seen him right and wrong like every one. He makes sense talking about the fundementals in the commodity markets. I however trade them using TA only with stop losses etc. How does he know most major banks are bust?? Where does he get his knowledge from? Everyone just thinks he said it so it must be right.
December 12th, 2008 at 10:29 pm
wunsacon says “Maybe the GM money is better spend building shelter …”
Imo each community should have a commune type shelter, food kitchen and medical center. Anyone can stay as long as they wish or need. Should be cheaper than prisons to operate. Adult kids and the destitute can network and figure a plan out into the promised land.
Whammer says “daughter is going down there to work”
Didn’t say if it was volunteer or not. Tell her to keep her own health priority one. On volunteering … been doing that all my life to some extent … its been a world of experience – profitable to me in $s, not so much.
December 13th, 2008 at 2:58 am
@Grego658, thanks. She’s going as a volunteer, a short “engagement”, should be OK…
December 13th, 2008 at 4:06 am
I guess the consolation prize is that if they give all this money to incompetent people it will just be destroyed faster and thus the inflation problem in this ponzi scheme will be solved. I never realized there was a self correcting mechanism in klepto socialism.
The bonus is that when you give it to incompetent people they’ll probably just end up losing it all back to the competent ones anyway. And this way you don’t have to feed them. The competent ones always find a way to survive. It is the incompetent ones we end up having to feed when they shoot their feet off
December 13th, 2008 at 7:36 am
Barry, I hope you can post more articles speaking to the repercussions of the current US Treasury Bond Market BUBBLE! I know the rest of the world loves us for all of the things we do; but, I don’t think they are going to continue to accept negative returns on their US Treasuries for any significant amount of time.
In addition, I suspect they love us so much that they will fuck us the very first chance they get. Frankly, we deserve no less!! Turn-about is fair play, right? So in preparation for what is now unavoidable, please post items that will help us preserve our net-worth, when interest rates & inflation sky-rockets as we consider using our “legal-tender” as toilet paper. As you know, commodities took off this week, so the turn may have already occurred.
Having experienced the stock-market bubble of 2001, the real-estate bubble of 2006, one must be a complete idiot not to be preparing for the bursting of the Bond-Market bubble of 2008.
Send Help!!
December 13th, 2008 at 7:44 am
Thanks Man!! That was Quick!
http://www.ritholtz.com/blog/2008/12/some-things-should-not-be/
December 13th, 2008 at 6:11 pm
Lots of opinion, a scarcity of truth, time will tell what the world is headed for: INFLATION vs DEFLATION. Thus remember to follow the advice of a classic slogan, “Just remember, whatever happens, just make sure it doesnt happen to you.
Cowboy/Crony Crapitalism maybe over for this term…………will it happen again, YEP, seems to be the nature of man.
December 14th, 2008 at 6:43 pm
Wish there were better accounting to justify the claim, which I actually presume is true.
I also presume that for Paulson to announce the fact as such would be to lock up the world’s economy in a few minutes: no credit cards, no checking accounts, no securities clearing… and that therefore, it would be the height of folly to intimate that it even might be true.
I further wonder how, given the market-valuation of assets, ANY bank could ever be sound in a deflationary world. The capital ratios would have to be much higher than the possible downward revaluation of assets, and who knows what the maximum percent downward should be… 50%? That’d make running a bank extremely unprofitable.
Can anybody explain how we’re going to target reflation of all the banks’ assets without oh, doubling the CPI index in pretty short order?