Publication date: 2/5/2013
Looking at the shape of global events through economic-colored lenses, the West may no longer be on the ascendant.
In his upcoming book, Street Smarts: Adventures on the Road and in the Markets, billionaire investor Jim Rogers writes that the United States has lost the temperament to solve intractable problems like the federal budget deficit.
Fraud and incompetence in U.S. financial markets forced Rogers, co-founder of the Quantum Fund with George Soros, to think about alternative places to invest in the world. So, he moved his family to Singapore in 2007 and took long positions in commodities and currencies.
Rogers’ simple solution to our budget woes? A consumption tax (sales or value added). Levied by every other developed nation in the world as well as some U.S. cities and states, a tax on what people spend versus a tax on what people earn pares down the bureaucracy that handles tax filings and encourages savings and investment.
Before calling his bluff, consider that Rogers is playing a legitimate bet on the winds of change blowing from the East.
“I came to Singapore in response to the realization that the world is in the midst of a historic shift, a dramatic reshaping of the terrain, a decline of U.S. leadership in the world and a commensurate rise in Asia.”
Rogers encourages readers of his book to apply for Permanent Resident status and move to the vibrant city of Singapore. No need to learn Mandarin or Cantonese because English is the official language of government and business. He writes that Singapore is a safe place to raise children with public education, housing, healthcare and infrastructure among the best in Asia.
Rogers also cites a high savings and investment rate as key to Singapore’s shining success. Without capital, savings and investing, he writes, an economy can only flounder.
Agree or disagree with Rogers about investing, economics or finance, he will have readers of Street Smarts looking beyond the end of their noses.
Federal deficit: solved. How about immigration? Rogers has a solution for fixing our borders:
“If it were up to me, borders to all countries would be open. It would promote a more natural ebb and flow, make every country more dynamic. New blood, new capital, new ideas. These always benefit a society and an economy. They make us more creative. Throughout history, the people most eager to immigrate have been those people who are ambitious, smart, and energetic, the kind of people you would want to hire.”
“They are the kinds of people who come to a new country and build companies and create fortunes.”
On Asia, Rogers writes:
“New York is the economic and cultural capital of what is now the largest debtor nation in the history of the world. The world’s largest creditor nations are in Asia. That is where the assets are. That is where the dynamism and energy are: China, Japan, Taiwan, Korea, Singapore, Hong Kong.”
About being skeptical:
“Most of the things you are told, after turning over that rock, are going to be inaccurate, reflecting a lack of knowledge or a distortion of information, whether on the part of government, a company, or an individual. You cannot take anybody’s word for anything.”
About selling short:
“You sell the stock at 25 and then buy it at 10. How do you sell it if you do not first have it? You borrow the stock from somebody.”
“I went broke doing it early in my career.”
On knowing when to sit and wait:
“That is what successful investors do. They do not do a lot of jumping around. Warren Buffett rarely changes his holdings. I do not change my positions a lot since I invest in secular trends, which by definition last many years.”
On commodity markets:
“All you have to know about cotton is this: Is there too much cotton or too little cotton?”
“A greater knowledge of history, geography and civics is demanded of third world immigrants applying for U.S. citizenship than is possessed by your elected representatives. And their grasp of finance and economics is no less abysmal.”
On Federal Reserve chair Ben Bernanke:
“He knows little about economics or finance, he has no idea how markets work and the only thing he truly understands about currency is how to print it. He has yet to figure out that the present crisis is one not of liquidity, but of solvency.”
Street Smarts by Jim Rogers is a worthwhile read with relevant and forward insights from an expert in global financial markets.
Category: Nonfiction, Economics