Leaders of the 17-nation eurozone announced on Friday a plan to rescue their failing banks with cash normally reserved for fledgling governments. When the “recapitalization” (i.e. bailout) plan was unveiled, markets responded very, very well.

However, despite the positive market reaction, there is one veteran businessman who thinks the deal is a big mistake. In fact, he thinks it’s only making things worse. According to Quantum Fund co-founder, free market advocate, author, and regular lecturer of finance at the Columbia University Graduate School of Business Jim Rogers, the EU’s decision to recapitalize its banks won’t do anything to fight off the oncoming “financial Armageddon.”

“Just because now you have a way to get [EU governments] to borrow even more money, this is not solving the problem, this is making the problem worse,” Rogers said during an interview on CNBC on Friday.

Strap Yourselves in: Jim Rogers Explains Why We Are Going to Have Financial ArmageddonGerman Chancellor Angela Merkel (AP Photo/Michel Euler)

“People need to stop spending money they don’t have. The solution to too much debt is not more debt. All this little agreement does is give them (banks) a chance to have even more debt for a while longer,” he added.

Rogers went on to argue that the deal does very little to improve the finances of crumbling nations such as Greece and Spain and that governments need to stop rescuing failing banks, even if it results in “financial Armageddon.”

“What would make me very excited is if a few people went bankrupt or a few people started paying off their debt. We are going to have financial Armageddon anyways, when the rest of the world is not going to give these people any more money,” he said.

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“What are you going to do in two, three, four years when the market suddenly says ‘no more money’ and the Germans don’t have more money, and the American debt has gone through the roof?” he asked.

The businessman went on to explain that the positive reaction the markets are currently experiencing will be short-lived.

“How many times has this happened in the last three years — they (EU leaders) have had a meeting, the markets have rallied, two days later the market says wait a minute this doesn’t solve the problem,” he said.

Front page photo source: Bloomberg

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