Breakout

America Is Facing a Lost Generation: Jim Rogers

Jeff Macke
Breakout

Legendary international investor Jim Rogers has good news and bad news. The good news is the fake fiscal cliff set for early next year is going to be pushed back, delayed or otherwise avoided for now. The bad news is literally everything else about America's economic situation.

The problem facing the country is two-fold, as Rogers sees it. First, per the laws of economic cycles, we're overdue for a natural pullback. We've had recessions "every four to six years since the beginning of the republic," Rogers notes. There was a recession in 2002, another in 2008 making this about the right time.

Exacerbating matters is the amount of debt that's been accumulated trying to flatten the downside of the cycles, particularly in 2008 when the entire system seemed on the brink. Whatever the merits of stimulus then, after four years of money printing the country isn't in a position to try to dig us out of another hole through additional monetary injections.

The result of dodging the pain to date is that the country literally can't afford to do more than throw increasingly desperate and arcane policies at the economy. The pain can be pushed off, but as was seen in the financial crisis, there's not really any such thing as a free standing organization anymore. When one ghost company fails so do its counterparties and business partners triggering a daisy chain of ugly that ends up in either a total collapse or, in the case of 2008, TARP.

Rogers says America is following the path of another nation that simply refused to let its "zombie" companies fail. "Japan did the same thing in the early '90s." he says. "It's 22-years later and their stock market is down 80%."

Surely America wouldn't let something that grim happen here. Right?

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