During an interview on CNBC’s “Fast Money Halftime Report,” Quantum Fund co-founder, free market advocate, author, and regular lecturer of finance at the Columbia University Graduate School of Business Jim Rogers said that the Spanish bailout was “the most insane thing” he had ever heard.
“It’s making the situation worse. The solution to too much debt is not more debt. This is the most insane thing I’ve ever heard,” Rogers said. “It’s going to make the collapse when it comes even worse. Be careful. You should be not careful, you should be worried.”
Spain’s sovereign credit rating was downgraded last week to just two notches above junk status. That made a bailout pretty much inevitable.
The troubled EU country announced on Saturday that it was eligible for a bailout of up to $125 billion. However, unlike literally every other bailed out EU country, Spain somehow managed to negotiate an austerity-free rescue package.
“So much for the Spain bailout. Why do you think the euphoria has been so short-lived today?” CNBC host Scott Wapner asked in reference to yesterday’s poor market performance.
“Scott, it’s nothing more than pushing the thing out into the future,” Rogers responded.
Watch the Rogers/Wapner interview [via CNBC]:
“What would you have done? What was the right answer?” Wapner asked.
“Let them go bankrupt. I would let all those people — Scott, the way the system is supposed to work, when you fail, you fail. Competent people come in, take over the assets, reorganize and start over,” Rogers replied.
“What we are doing in the West, we’re taking the assets from the competent people, giving them to the incompetent people and saying, ‘okay, now you compete with the competent people with their money.’ It’s absurd economics. It’s absurd morality. It’s absurd economics,” he added.
Wapner continued in this line of questioning.
“That would be your same argument as it relates to Greece, then?” the CNBC host asked.
“Of course! We’re looking forward to elections in less than a week. Greece should be the first to go bankrupt. Let Greece go bankrupt and then the others would realize, ‘okay, guys, we got to shape up. If we don’t shape up, we’re finished,’” Rogers responded.
“That would be a good lesson for Europe, a good lesson for the West, and then the euro would be a very strong currency and we should buy all the euros we can,” he added.
Wapner had one last point he wanted to clarify.
“Despite all of that and as negative as that could be perceived as, you know, you sounding, you’re long commodities. You still believe in that story. You’re long various currencies as well. So you’re looking for opportunity in making money on the long side of things, too. I want to make that clear, you’re not shorting the whole world and running into the jungle,” Wapner said in what could easily be a reference to Rogers’ former partner, George Soros.
“No, no, no. I’m long a lot of stuff. But, Scott, we in the West have made some terrible mistakes in the past 30 or 40 years. We have run up staggering debts. You don’t just run up staggering debts and one day wake up and say, ‘oh, well, we made a mistake. Now everything is okay,’” Rogers replied.
“Somebody has to pay the piper. You know who it is? You, me and everybody watching this show,” he added.