Real Vision: China and Global Investment

Jim Rogers has been fascinated by China since he drove his motorcycle across the country in the 1980s.

The investing legend joins Real Vision to give his view of the rising Asian superpower and, more broadly, on rising Asia in general.

Rogers provides his views on the Hong Kong crisis and the simmering trade war. He also weighs in on whether the era of US dollar primacy has passed — especially now that the United States has become, in Rogers’ view, “the largest debtor nation in the history of the world.”

$17 Trillion In Negative Yielding Debt

$17 trillion now of negative yielding debt. It never happened in world history. It's absurd. 

It's a bunch of misguided bureaucrats and academics who don't know what they're doing. They're hoping. This has never happened in world history. Never in world history has this happened and it's going to be a gigantic disaster for all of us. 

How does it end? Badly. Bankruptcies. There are many states and cities, not just in America, Germany's got cities that are in trouble. Forget, we haven't even talked about Spain yet or Italy or some of the other places. No, many places are going to have serious problems. 

 Once interest rates go back to normal, it's going to cause a lot of, lot of bankruptcies and problems around the world.

China Is Letting The Currency Go Down

Any country, which has hundreds of billions of dollars of sanctions or tariffs imposed on it, the currency is going to go down, period, full stop. It's not just the Chinese, the Chinese are apparently letting it go down and not trying to control it. Anybody who has that ax chopped on it is going to be affected, because it theoretically is going to hurt your trade balance of trade very seriously when you have those tariffs imposed. 

Maybe China's saying, "Okay, we'll let it go, we're not going to stop it." To try to stop a currency declining when you've had hundreds of billions of dollars of tariffs hitting you, you have to be affected. To try to stop that decline would cost gigantic amounts of money.

The Future Of Hong Kong Is Continued Decline

I think the future of Hong Kong is continued decline. 

The only reason Hong Kong became Hong Kong was because of 1949, in Mao Zi time. Now, you don't need Hong Kong anymore. Shanghai was the largest financial center between New York and London before the before the war, Second World War.

China's opening up so we don't need Hong Kong anymore. It's going to continue to decline. When the Renminbi, the Chinese currency, is convertible, yes, I would expect the Hong Kong dollar to disappear.

Related tickers:  iShares FTSE/Xinhua China 25 Index ETF (FXI), iShares MSCI Hong Kong Index ETF (EWH)

New Book: Warning To Japan

In his most recent book, U.S. investor Jim Rogers issues a stark warning over Japan's future. In "Warning To Japan", warned of a dark future for Japan if it does not take drastic measures to curb its massive debt and severe population decline. Here's a few excerpts from the book:

"Japan's national debt is going to swell due to the Olympics, and this can only lead to a bad outcome for ordinary citizens." 

"There was such a long period of astonishing prosperity, when everything worked." 

"But Japan got so rich, so successful, that... it resulted in huge protectionism." 

"If there was somebody in Japan who will say, we got to bear this pain, we have to sort this out. And if we don't, the 10-year-olds in Japan today will have no future." 

"But the problem is that the politicians in power today don't want to do that. They know if they cause the pain, it is not going to be good for them." 

"They're opening up a little bit, but not nearly enough."

"It's simple arithmetic. The population is going down and they're not having babies. It is straightforward, but overwhelming and frightening for their future."

"Few people have any confidence; they know, consciously or subconsciously, that there is something wrong. Maybe somebody will change things, but I'm afraid I don't see that happening right now. There are too many entrenched interests."

Investing, Global Debt & A Bubble In Education

In a recent interview with Money And Markets, Jim Rogers commented on his unortodhox approach to investing,

“I’ve been wildly bullish on many things many times, but often it’s things that people don’t understand. That’s how you get rich: You buy things that other people don’t care about.”

And Jim also expressed concerns about the rising level of debt worldwide:

“Nobody’s reduced their debt since 2008, specifically the mounting deficits in both the U.S. and China."

And finally Jim Rogers pinpointed a bubble in education in the United States:

There’s also a bubble in college education in the U.S., but I don’t know any way to short Princeton.”

Bankruptcies Are Coming

You're gonna start seeing bankruptcies. You're even gonna see bankruptcies in China which is gonna shock a lot of people including me and I just told you it's coming. 

There's a lot of debt in the world. In 2008 we had a big problem because of too much debt. Since then, you know the debt has skyrocketed everywhere and so we're gonna start seeing bankruptcies and with interest rates rising we're gonna see a collapse.