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Jim Rogers :I guarantee by 2012 next recession

  
Analysis, Education, Video
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Last night in London, Jim Rogers, chairman of Rogers Holdings, was interviewed by CNBC after US Fed announced its decision of leaving the rates alone.

Rogers is very critical to the Fed whose solution to the crisis has been “printing money”, a strategy that he does not see sustainable, “there will be no trees left” if the Fed keep on printing money. Rogers’s contempt to the US Fed is obvious, to a point that he stated that he isn’t paying attention to them at all. He thinks investors are better served to read and think and come up with their our opinions. “Sometimes I got it wrong, sometimes Igot it right” he said.

Commenting on the US Housing market, Rogers thinks that the market will stay low for many years to come to work out the inventories.

I found his answer to the recession question evasive at the best, for the CNBC anchor was looking for a “Yes” or “No” for an imminent double-dip recession. “We’re going to have another recession, I guarantee you… By 2012 say, it’s time for another recession.” – anybody could have said that, for recession comes and goes.

But, “The next time it’s going to be worse because we’ve shot all of our bullets,” he warned us. Rogers has been advocating investing in commodities.

Kiss That V-Shaped Recovery Good-Bye: The U.S. "Worse Than Greece," Says Economist

  
Analysis, Economy, Education, US Market, Video
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There’s been many letters and symbols used over the last year to describe the shape of the U.S. economic recovery.  There’s the strong V-shaped recovery; the square root shaped recovery to connote a strong recovery followed by a period of flat to no growth; and the W-shaped recovery favored by those believing in a double dip recession.

Tech Ticker guest Michael Pento has a new twist on the discussion. Pento, senior market strategist with Delta Global Advisors believes this is a tee-pee shaped recovery with the top of that tee-pee having already formed in the fourth quarter.

Pento is negative on America’s near term economic prospects for three main reasons:  too little bank lending, too few jobs and too much public and private debt. “I’ve never seen a v-shaped recovery occur when commercial bank lending was down 7% year over year.  So, small business are not getting loans to create capital goods and to expand and hire individuals,” he observes.

Exacerbating the problems at home, is what he describes, as a weak economy abroad.  With China looking to clamp down on growth, the EuroZone struggling with its own debt problems, Pento asks, “Where is the growth going to come from in demand from overseas?

When he says “demand” he’s referring not only to products and services but also to our growing debt burden.  As the price of servicing our deficit grows, when the Federal Reserve tightens monetary policy, Pento is confident others will realize what he already does: the situation in the U.S. is “worse than Greece.”

The way he sees it, there’s a strong potential for a bond and dollar crisis when China starts selling Treasuries.  “Tell me which shape recovery that will yield for the United States?”

The perils of Paulson

  
Analysis, Education
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The crown may be slipping fast from billionaire trader John Paulson’s head.

The hedge fund manager became an overnight sensation in 2007 by betting big and early on the collapse of the U.S. housing market, and then doing much of the same on a surge in gold prices. But he is now emerging as one of this year’s big losers in the $2 trillion hedge fund industry.

His Paulson & Co. hedge fund firm, which managed $38 billion as recently as this past March, is down to about $35 billion as of the first week of August, and it shrinks a little bit more with every big drop in the U.S. stock market.

One of Paulson’s two main funds is now down more than 30 percent this year, the firm has reported to clients, compared to a much smaller 6.1 percent decline for the average hedge fund, according to Hedge Fund Research.

The problem for the 55-year-old manager: His equally daring bet that the U.S. economy and housing market would rebound strongly from the financial crisis — a big wager that looked prescient a year ago — isn’t panning out as planned.

Paulson’s funds have amassed huge, mutual fund-style stakes in shares of financial institutions like Bank of America, Citigroup, Hartford Financial, Popular Inc. and American Capital. But these are ringing up hefty losses.

And with fears of a double-dip recession in the United States mounting, coupled with this month’s 13 percent plunge in the S&P 500, the talk is growing on Wall Street that unless Paulson can quickly turn things around, the hedge fund king could be hit with a wave of year-end investor redemptions.

“There are many investors who have experienced great gains with John Paulson, but a lot of the money has come into his funds after those great gains were achieved, and the relative newcomers are seeing a lot of heavy losses,” said Daryl Jones, director of research at Hedgeye Risk Management, which sells investment research to institutional investors. “I would imagine it would lessen their appetite to stay with someone who is supposed to be a big superstar but is down double digits right now.”

Paulson, through a firm spokesman, declined to comment. But people close to Paulson point out that other than hedge fund guru George Soros, no one has consistently made more money for clients than the man referred to by his friends and associates as “J.P.”

LOYALTY TEST

This year, however, his investors’ loyalty is being put to the test.

Maybe no one single trade has come to symbolize Paulson’s bullishness on the U.S. economy more than Bank of America. By August 9, the troubled lender’s shares were down 43 percent this year, reducing the value of the 124 million shares Paulson owned as of March 31 by $784 million. Paulson is believed to have sold some of his Bank of America shares as the stock has plunged toward the $7 mark, but the firm has refused to comment on its current position. (link.reuters.com/gem23s)

The picture isn’t much prettier for Paulson’s large share holdings in Citigroup, Popular (formerly Banco Popular) and SunTrust Banks. The value of Paulson’s equity stake in those three banks, assuming the funds haven’t sold any shares since March 31, would have declined by more than $800 million over the past four months.

And then there is Sino-Forest, the troubled Chinese forestry company. Paulson absorbed a $500 million loss on the stock in June after allegations of accounting irregularities at the Hong Kong-based company surfaced earlier in the month. (link.reuters.com/hem23s)

The series of missteps is tarnishing the near god-like status the former Bear Stearns trader has earned over the past few years.

Much of the $20 billion in outside investor money Paulson manages has come from pension funds and clients who bought in after he made $15 billion for the firm in 2007 on his well-chronicled subprime mortgage trade. Paulson raised that money by making his hedge fund one of the most widely available to wealthy customers of dozens of large and small brokerage firms. (more…)

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