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Jim Rogers on Europe: It’s Time for a Painful Solution

Jeff Macke

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With European officials scheduled to announce yet another quasi-plan for resolving the continent's crisis, the investing world holds its collective breath hoping for a tactic sufficient enough to allow stocks to hold onto their gains of last week. Since waiting for a logical plan out of Europe and betting on hope are both recipes for disaster, Breakout welcomed legendary investor Jim Rogers to lay out what he believes we'll hear and what he wishes would happen.

Given Rogers' longstanding disdain for Central Banks, what should happen and what will happen this week are entirely different things.

"We're going to let the banks who made mistakes go bankrupt, we're going to let Greece go bankrupt, we're going to take massive losses, we're going to ring-fence the system and start over," says Rogers in the attached video clip. "That would be a solution to the problem."

Having laid out his wish list, Rogers quickly dispensed with the notion any such ueber-austerity is in the cards. "Is it going to happen? No. (Europe) is going to do something which is going to push the problem out into the future," he says. "And next year we're going to be having the same conversation."

While Jim Rogers is a fantastic and insightful guest, the prospect of no progress whatsoever is a depressing one. As a result I had to ask whether intentionally plunging Europe into an immediate and crippling recession is really preferable to trying to prop up the Eurozone nations until an organic recovery can take hold.

The notion is anathema to Rogers. "We in the U.S. have been pushing it out into the future also," says Rogers. "We've lost one decade so far, the stock market is where it was 10 or 12 years ago." He adds that Japan has lost 20 years of progress and 80% of the value of its stock market by delaying reality.

Rogers compares Europe to the situation facing Scandinavia several years ago. Quick, decisive action at that time limited the crisis to two or three years of pain, as opposed to decades of misery. To Rogers the trade is obvious, take the short-term hit and let the healing begin.

Sadly, that's not going to happen. That being the case Rogers says he's not putting new money into Europe or the U.S., but instead is focusing on the rest of the globe.

Watch for more of our conversation with Rogers to hear his thoughts on the U.S. Fed and details on how he's investing now.