In a recent interview with Business Insider CEO Henry Blodget on “The Bottom Line,” investor and market analysts Jim Rogers said we should expect a market crash in the next few years that will rival anything we’ve seen in our lifetime.
Some stocks in America are turning into a bubble. The bubble’s gonna come. Then it’s going to collapse, and you should be very worried.”
Rogers points out that debt was a big part of the crash in 2008. Today, the debt situation is even worse than it was then.
You know, in 2008, we had a problem because of debt. Henry, the debt now, that debt is nothing compared to what’s happening now. 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. The federal reserves, the central bank in America, the balance sheet is up over five times since 2008. It’s going to be the worst in your lifetime — my lifetime too. Be worried.”
So, when will the bubble burst? Rogers said we can’t know for sure, but we’re definitely due.
We’ve had financial problems in America — let’s use America — every four to seven years, since the beginning of the republic. Well, it’s been over eight since the last one. This is the longest or second-longest in recorded history, so it’s coming.”
He also warned that pin-prick that pops the bubble will probably come from an unexpected direction.
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.”
Rogers said the Fed and other central banks will be powerless to stop it. He said they will continue to try to nudge up rates until things go bad. Then they will respond to calls to “save us.”
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.”
Rogers paints a pretty bleak picture of what the aftermath of this next crash will look like.
You’re going to see governments fail. You’re going to see countries fail, this time around. Iceland failed last time. Other countries fail. You’re going to see more of that. You’re going to see parties disappear. 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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