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Wednesday, 11 February 2009
Investor Jim Rogers takes issue with US policies
President Barack Obama’s policies on foreign trade and US government bailouts came under heavy fire yesterday from financial experts Joel Stern and Jim Rogers.
President Barack Obama’s policies on foreign trade and US government bailouts came under heavy fire yesterday from financial experts Joel Stern and Jim Rogers.
Mr. Stern and Mr. Rogers believe unequivocally that Mr. Obama’s proposed restrictions on foreign trade would have a crippling effect on the world economy - including Singapore.
‘If these interventionist policies are carried out, the world economy is going to get worse and Singapore is going to get buffeted by it. If people aren’t shipping things, the port of Singapore is going to suffer,’ Mr. Rogers said during a panel discussion organised by the International Trading Institute at Singapore Management University (SMU).
Mr. Stern, chairman and chief executive officer of Stern Stewart & Co, also challenged the economic soundness of Mr. Obama’s remedy for the economic downturn.
‘There is not a micro economist in the world who thinks protectionism is a good idea for making things better for anybody,’ he said.
On a global level, the ramifications of such trade policies are clear, according to Mr. Stern. ‘Other countries will engage in the same protectionist measures and a worldwide depression will ensue,’ he said.
In contrast, Mr. Rogers and Mr. Stern praised Singapore’s handling of the financial gloom, including the government’s candidness and the use of the country’s reserves.
‘Singapore has large reserves, and that’s what they are for - to be used in a time like this. America, however, is using money it doesn’t have,’ said Mr. Rogers.
He recommended that Singapore spend its reserves on areas that will make it more competitive over the long term, like education.
America’s spending on bailouts is viewed dimly by Mr. Rogers. ‘US banks should be forced into bankruptcy if they cannot raise new capital, because they are bankrupt,’ he said.
He reckons the banks’ debts should be marked to market and new shares should be offered through rights issues at deep discounts.
He is also unhappy with Mr. Obama’s choice of advisers, such as Lawrence Summers, head of the White House’s National Economic Council, who generated criticism as Treasury secretary in the Clinton administration.
‘The people that President Obama has brought in are the ones who caused the problems in the first place,’ Mr. Rogers said.
Mr. Stern also has a grim outlook for the US economy, which would translate into equally grim news for Singapore.
‘The US economy is going to shrink in real terms by 5-6 per cent this year, and if so, the Singapore economy will not be shrinking by anything less than 8-10 per cent,’ he warned.
There will be no letting up in 2010 either, as Mr. Stern predicts shrinkage of 3-4 per cent for the US economy then.
But Singaporeans can take comfort from the fact that there is no sounder country in these tough times.
‘The Singapore dollar is one of the soundest currencies in the world, and with its reserves, its economy will be the last one standing in the region,’ Mr. Rogers said.
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Investor Jim Rogers takes issue with US policies
By JOYCE HOOI
10 February 2009
President Barack Obama’s policies on foreign trade and US government bailouts came under heavy fire yesterday from financial experts Joel Stern and Jim Rogers.
Mr. Stern and Mr. Rogers believe unequivocally that Mr. Obama’s proposed restrictions on foreign trade would have a crippling effect on the world economy - including Singapore.
‘If these interventionist policies are carried out, the world economy is going to get worse and Singapore is going to get buffeted by it. If people aren’t shipping things, the port of Singapore is going to suffer,’ Mr. Rogers said during a panel discussion organised by the International Trading Institute at Singapore Management University (SMU).
Mr. Stern, chairman and chief executive officer of Stern Stewart & Co, also challenged the economic soundness of Mr. Obama’s remedy for the economic downturn.
‘There is not a micro economist in the world who thinks protectionism is a good idea for making things better for anybody,’ he said.
On a global level, the ramifications of such trade policies are clear, according to Mr. Stern. ‘Other countries will engage in the same protectionist measures and a worldwide depression will ensue,’ he said.
In contrast, Mr. Rogers and Mr. Stern praised Singapore’s handling of the financial gloom, including the government’s candidness and the use of the country’s reserves.
‘Singapore has large reserves, and that’s what they are for - to be used in a time like this. America, however, is using money it doesn’t have,’ said Mr. Rogers.
He recommended that Singapore spend its reserves on areas that will make it more competitive over the long term, like education.
America’s spending on bailouts is viewed dimly by Mr. Rogers. ‘US banks should be forced into bankruptcy if they cannot raise new capital, because they are bankrupt,’ he said.
He reckons the banks’ debts should be marked to market and new shares should be offered through rights issues at deep discounts.
He is also unhappy with Mr. Obama’s choice of advisers, such as Lawrence Summers, head of the White House’s National Economic Council, who generated criticism as Treasury secretary in the Clinton administration.
‘The people that President Obama has brought in are the ones who caused the problems in the first place,’ Mr. Rogers said.
Mr. Stern also has a grim outlook for the US economy, which would translate into equally grim news for Singapore.
‘The US economy is going to shrink in real terms by 5-6 per cent this year, and if so, the Singapore economy will not be shrinking by anything less than 8-10 per cent,’ he warned.
There will be no letting up in 2010 either, as Mr. Stern predicts shrinkage of 3-4 per cent for the US economy then.
But Singaporeans can take comfort from the fact that there is no sounder country in these tough times.
‘The Singapore dollar is one of the soundest currencies in the world, and with its reserves, its economy will be the last one standing in the region,’ Mr. Rogers said.
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