Jim Rogers Warns Next Crisis Will Be "Biggest In My Lifetime"

Tyler Durden's picture

Billionaire commodity guru Jim Rogers believes the next economic catastrophe is coming. And when it arrives, it’ll be the worst financial calamity the 74-year old investor has ever seen.

Rogers, who discussed his outlook on “The Bottom Line” with Henry Blodget, told the Business Insider founder that the tremendous debt buildup and unreasonably high asset valuations have made the global economy even more vulnerable than it was in 2008, and that the next crash will the "the biggest in my lifetime."

 

 

Meanwhile, the spark that ignites the next crisis could be the collapse of a pension fund – or it could be something unforeseen, as Rogers explains below:

“Well, it’s interesting because these things always start where we’re not looking. In 2007, Iceland went broke.

 

People said, ‘Iceland? Is that a country? They have a market?’ And then Ireland went broke. And then Bear Stearns went broke. And Lehman Brothers went broke. They spiral like that.

 

Always happens where we’re not looking. I don’t know. It could be an American pension plan that goes broke and many of them are broke, as you know. It could be some country we’re not watching. It could be all sorts of things. It could be war. Unlikely to be war but it’s going to be something.

Central banks, of course, have abetted this behavior through an unprecedented expansion of their balance sheets. Global central banks now have $15.1 trillion worth of assets on their balance sheets, according to Bank of America’s Michael Hartnett. The Fed's balance sheet alone has increased five-fold since the crisis, Rogers noted.

China could easily end up being the cradle where the next crisis is nurtured, thanks to the explosive debt growth seen in the world's second-largest economy since the crisis.

“In 2008, the Chinese had a lot of money saved for a rainy day. It started raining. They started spending the money. Now, even the Chinese have debt and the debt is much higher.”

Goldman Sachs tried to calculate China’s real debt load last year, and came up with 250% of GDP. And as Bloomberg reported in April, a rash of bankruptcies are unearthing hidden debt and suggesting that the true debt load in China’s corporate sector is much higher than previously believed.

What can be done once the crisis arrives? The Fed, with interest rates near zero and its balance sheet still swollen at $4.5 trillion, will probably be powerless to mitigate the fallout from the coming crisis, Rogers said. Though that won’t stop it from trying.

When things start going really bad, people are going to call and say, ‘You must save me. It’s Western civilization. It’s going to collapse.’ And the Fed, who is made up of bureaucrats and politicians, will say, ‘Well, we better do something.’ And they’ll try but it won’t work. It’ll cause some rallies but it won’t work this time.

Springing forth from the financial turmoil, the political turmoil that ensues could topple governments, or lead to the demise of other venerated institutions, be they investment banks or universities.

“You’re going to see institutions that have been around for a long time - Lehman Brothers had been around over 150 years. Gone. Not even a memory for most people. You’re going to see a lot more of that next around, whether it’s museums or hospitals or universities or financial firms.”
 

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This is it's picture

First for Jim! 

GUS100CORRINA's picture

While Jim maybe correct, my bigger concern is how with the CBs manage it? We saw a shot across the bow today with the FANG revelation from GOLDMAN. Everyone is on the SAME SIDE OF THE BOAT and MARGIN DEBT IS OFF THE CHARTS!

BaBaBouy's picture

HOW Can there be a Crisis ???

The CB's can print Keynesian Paper Fiats Money indefinitely, and keep shorting paper GOLD, and Buying all stocks...

It's a Perfect game, Whoes gonna stop'em...

WHO ?

Joe Trader's picture

The problem is he's been predicting this for over 30 years.

BaBaBouy's picture

There is no Crisis....

The only thing is "SOME" asset prices are going thru the Roof...

Just look at this miniature watercolor by Cezanne, its gonna sell for 6 Million Pounds!

http://artdaily.com/news/96552/Exquisite-work-that-reveals-genius-of-C-z...

jcaz's picture

Is he still holed up on his farm in Micronesia after the last time he made this call?

cheka's picture

in the last implosion rogers gave the best advice of any of the 'experts':  don't short anything.  any/all of it can rise in price because of central banks flooding the world with fiat

eforce's picture

US is in a better position because they have Trump and an armed population which is mostly loyal to him, everywhere else is fucked in comparison.

Juggernaut x2's picture

Donald Trump wouldn't bother to piss on you if you were on fire- he isn't worth one drop of my blood

open calender's picture

you can add an extra 1200/USD a week to your account working at home for 3 hours a day... go here to this site... http://bit.ly/2jdTzrM

eforce's picture

Someone was being assaulted once and Trump stopped his car and got out and stopped it, I think he cares a little more than you give him credit for.

PTR's picture

Hell, I'm still watching what happens with the Japanese-owed US bonds and bills he spoke of in the 90's.  That was the focal point he hit on so often.  20 years ago.

Herodotus's picture

Eventually foreign sellers of goods will no longer accept them because they will see that they are depreciating at a faster and faster pace.

FarCanal's picture

Who told you they can print indefinitely? Didn't work out for Weimar and Zimbabwe. Just wait till the Fed Funds rate approaches 2,5%-3%....all that debt everywhere and the interest payments ,Kaboom.

Silver Bug's picture

Jim Rogers is a legend, he is right in stating that this party is coming to an end, one way or another. This fiat system simply can't sustain itself forever.

 

http://jimroger.blogspot.ca/2017/05/we-are-forced-by-fed-financial-crisi...

moneybots's picture

"This fiat system simply can't sustain itself forever."

 

It is all fiat, even gold. When gold is money, it is by government fiat. As everything is cyclical, nothing can sustain itself forever. Even gold has a cycle.

GUS100CORRINA's picture

Jim Rogers Warns Next Crisis Will Be "Biggest In My Lifetime"

My response: Jim, you are correct. It is not if, but when. Question for Jim: Why is Agriculture in the toilet? People can't eat iPhones? See DBA etf chart as an example.

http://www.finviz.com/quote.ashx?t=DBA&ty=c&ta=0&p=m

Inquiring minds want to know!!!

mofreedom's picture

It doesn't have to be a crisis EVER,,,markets don't HAVE TO DO ANYTHING...PERIOD...DAMN MAN...EVER.

I do agree with you on his ag nonsense of the past.  Weather is a god named GOD,,,not AL GORE.  And population growth doesn't guarantee new growth will have the money to eat.  And efficiency in ag practices just means more is able to be produced,,,not bullish ag, and it's happening in China and India.   LOOK OUT BELOW.

Despots (ALGORE) eat well.  NK-types,,,not so much.

 

 

The Ingenious Gentleman's picture

Why is ag in the toilet?

1. abundant supply from better-than-expected crop yields

2. investment money moving out of commodities

3. the prospect of a global recession that will cut demand.

Never One Roach's picture

If RE ever corrects it will be a doozy!

Most likely CBs won't let it ever revert to the norm, at least not in my lifetime.

But he is correct that the next one wil hit high and low, wide and near. I read MD Anderson Cancer Hospital is even in financial trouble with a 50% drop in revenues. Many other hospitals closing due to costs, regulations, etc.

Add that to the thousbands of store closings, etc. Lots of jobless people.

corporatewhore's picture

What is the amount owed to Springfield Memorial Hospital by the STATE OF ILLINOIS? 

you know, the broke ass state that can't figure out how to make a budget and has school districts ready to open and close in the fall within weeks.

 

I'd LOL but it isn't funny

Dewey Cheatum and Howe's picture

of course they will never allow to revert to norm, they are supplanting growth [absent real organic demand] by sitting on the reset switch for a fucking decade. with ZERO, I repeat ZERO abilitiy to revert to norm. What ever norm means anymore.

Cheyenne01's picture

But... the restaurants and the bars are packed where I live! Good times roll on, thanks to credit cards. Imagine if - when - the music stops!

Ghost who Walks's picture

The rate limiting factor in managing any future crisis is not central banks. There are only a few major CB's and their management teams are small and homogenous. Compare that to the governments of the world.

Governments will not be able to act together to provide stability in the face of instability. There are too many conflicting political interests, and ideological approaches. Compare this to the current coordination between the major CB's.

The world can't even find a common approach to dealing with terrorism. One set of governments funds the proxies in Syria and another set of Governments has to deal with the conflict and outcomes.

The problem will be the demands placed on politicians to try to protect special interests from the crisis and at the same time respond to the needs of their electorates.

Politicians are not not currently well practiced in Triage and quick decision making. The very practice of politics currently should be a caution as to where the problem will arise.

As the crisis unfolds politicians and governments will always be behind the optimum decision points, and the decisions that they make will not be of sufficient strength to stabilise the situation and promote a recovery.

Once the broad public loses faith in the political system and politicians and the economic system and banks it will require some major upheavals in existing power structures to deal with the new realities.

Iron head's picture

Gold baby. Get your gold now!!!

Batman11's picture

The Asian Century, sponsored by US capital and businessmen.

Let's offshore everything for higher profits.

Let's invest in Asia for higher returns.

The US was starved of investment and went into decline.

Adios America, hello Asia.

Jim Rogers knows what's coming, he's in Singapore.

 

mofreedom's picture

Let's offshore to escape the Lena Dunham-types at the EPA, labor, you name the soup.

Never One Roach's picture

That's 100% true. The USA made China's middle class one of the wealthiest in the world and that's why they are traveling all over the world buying everything. I even came across them in Buenos Aires buying an entire apartment building!

...all while bankrupting America's middle class.

Fundies's picture

The Chinese learned some time ago to keep their enemy's closer than their friends. They have made out like bandits at the world's expense. No need for them to fight a physical war to achieve massive domination. 

OKUSA's picture

Impossible. The Dow will rise to infinity. Cash for clunkers, degrees for dopes, QE's for G's.

Putrid_Scum's picture

You got into The Reset, Batman. An entire chapter devoted to your output.

You know you're the only guy to get into all three volumes. Amazing, well done. I should have wrote you but was busy.

Unfortunately my friend, I know what they know, and they see it coming. They know EXACTLY what's gone wrong. And your criticism of offshoring is unfair, it was a System Result, choice did not exist.

I'm not sure if we'll make it. And the Central Bankers are not in power so criticizing them is unfair.

The Families have begun to perform their magic.

Putrid
www.beforethecollapse.com

Endgame Napoleon's picture

A few people saw it coming, like that Burry guy, and they gave them eye rolls.

Putrid_Scum's picture

It's a pity, isn't it? Powerlessness.

It gets to people. You can see it here on Zerohedge. Mean angry frustrated humans.

You're better off going it alone, it's what I did, discard all desire for power.

Putrid

corporatewhore's picture

Speaking of Michael Burry, what is he doing at the present time other than running his fund IIRC.  Seems rather quiet.

TheSilentMajority's picture

Jimbo,

Please tell us something we dont know.

Deplorable's picture

Better happen soon because his lifetime is quickly coming to an end.

hsun85's picture

Guy has been saying the same thing for years, but this time it seems real.

natronic's picture

This feels like a bitcoin article that doesn't mention bitcoin

dot_bust's picture

Well, Banco Popular just went bust, and I don't think we've seen the contagion from that collapse yet.

All the big banks are tethered together by derivatives and corporate bonds.

So, it's hard for me to believe that the big American banks weren't holding Banco Popular's bonds. If they were indeed holding those bonds, they probably bought credit default swaps (CDS) in the event of  a collapse.

Whoever sold the CDS now has to pay out on them. Therefore, there's probably at least one big entity other than Banco Popular that just went bust.

I also want to know who was liquidating assets to meet margin calls due to delays on getting paid on credit default swaps.

corporatewhore's picture

Did people immediately recognize the crash of Creditanstalt in 1931 and its implications?

Ghost who Walks's picture

Your point is that it was only after the events that the forensic work was done to identify the trigger?

tribune's picture

"madness, madness"   -----  Major Clipton (played by James Donald) The Bridge on the River Kwai

Horse Pizzle's picture

I don't see a future for Harvard snowflake degrees.

silverer's picture

Back to the tech school. lol

Endgame Napoleon's picture

I do. People always need some symbol to stand for superior. But a lot of degrees are simply not valuable in the marketplace, especially liberal arts degrees, degrees in social sciences, etc. If someone subtracted out all the college-educated people working in state jobs that actually require a bachelor's degree from the total statistics that reflect what people make and who is employed with a degree and without, you would see that the government rewards most degrees more than the marketplace.

serotonindumptruck's picture

Jim is right about one thing.

When the Great Collapse begins, it will likely be the pension fund system that precipitates it.

From that point forward, it will be a cascade / domino effect, and the downward spiral will rapidly accelerate.

(Hat tip to NIN)

silverer's picture

Don't worry. They'll fix it with a nuclear war. lol

SoDamnMad's picture

Anybody notice that Putin told Roger Stone and just before that that if it comes to war it will be nuclear and no one will survive.

Can you tell me one US politician or general who has uttered the same thing in the last year?

Endgame Napoleon's picture

Will it be a state with a lot of retired government workers, but with few healthy industries, churning out jobs? Or, does that even matter?