Thursday, May 24, 2018

Jim Rogers: Extreme Bear Market Coming

These things always start small and with nobody noticing.

For instance, in 2007, Iceland went bankrupt when most people didn't know there was an Iceland, much less that it could go bankrupt. And then the next thing you knew, Bear Stearns collapsed; and then Lehman Brothers collapsed. Finally, everybody said, “Oh, there's a problem.”

That happened slowly over a year. That's probably what's going to happen this time. It may have already started. There are companies going bankrupt in China. The whole banking system in Latvia collapsed recently.

Who knows what will cause it? I don't. Rising interest rates, trade wars, real wars— many things could cause it. But it will be gradual. The worst collapse in my lifetime doesn't happen in a day. It will evolve over a year or two.

Historically, we’ve always had economic setbacks and bear markets. In 2008, we had a problem because of too much debt worldwide. Since then, the amount of debt has skyrocketed everywhere in the world. Why would people think the next collapse—whenever it comes—won’t be worse than the last one?

I have enormous confidence. When the bear market comes, it has to be the worst in my lifetime, because the debt is much, much higher than it's ever been in history.

Plus, there are dramatic changes taking place. Retail shops are liquidating all over the U.S. Somebody is going to be left holding a very big bag eventually as those stores go out of business. Many pension plans are under water. 

The state of Illinois, Connecticut and several others are essentially bankrupt now. There are many things that are going to be very, very serious going forward.

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