Monday, March 08, 2010
Famed investor Jim Rogers talked to Damien Hoffman at Wall Street Cheat Sheet and shared his thoughts about the future of the common currency in this interview:
Well I’m long the Euro because I expect them to come through this one okay. Either Greece is going to be papered over and they’ll give a blast to the Euro, or they’re going to let Greece go bankrupt. In my view, this is what they should do because then people would say, “Wow. They’re serious about sound economies in Europe.” That would make the Euro very strong. Then people would know they are not just going to print money or paper over failure.Amid all the talk about the troubles in Europe and the limitations of a common currency for more than a dozen disparate nations, this is the first time that I think I've heard this line of reasoning about why this could make the euro stronger - because the euro zone is actually doing something about deficits and forcing member nations toward sounder government finances, whereas, the U.S., U.K., Japan, and others just seem to be barreling toward a cliff.
Either way, I think there’s probably a rally coming. There’s a huge short position in the Euro and whenever there’s been a huge short position in anything, it’s sometimes profitable to go to the other side. So, I am long the Euro because I think there are too many pessimists.
Maybe Greece will go bankrupt and the Euro will collapse before people realize, “That’s good … that’s not bad.” Sometimes it takes a lot for perception to become reality or reality become perception.
The rest of the interview is also worth a look as Rogers talks about such topics as how you can't really sustain the kind of economy that we're trying to sustain here in the U.S.