Money wizard pessimistic about U.S. economy

ROGER SIMON

February 15, 1993|By ROGER SIMON

Tonight, Bill Clinton will go on TV and prepare us for his Presidency of Pain.

Then on Wednesday, he will go before Congress and detail the degree of misery that each American will have to bear in order to save this nation.

But it won't be enough. No matter how much hardship Bill Clinton dishes out, it will not be enough to save our economy.

So says certified financial wizard Jimmy Rogers.

"Bill Clinton is going to be a one-term president," Rogers said in a speech in Baltimore last week. "And he will be the last Democrat ever elected to the presidency."

Jimmy Rogers is not a Republican. And, he says, he does not intend that as a statement of partisan politics. He says it is mere economic fact.

James B. Rogers Jr. started playing the stock market in 1968 with $600 and became so filthy rich that he retired at age 39.

He now is part of the annual Barron's Roundtable (filthy rich guys sitting around talking about money) and he co-hosts "Your Portfolio" on CNBC, a financial cable-TV network.

He is on leave from the Columbia University Business School where he taught finance. And he has one simple piece of advice for you:

"Every American should have money invested outside the United States in the '90s. I am extremely worried about the United States and our currency down the line."

In other words, Jimmy Rogers is not bullish on America.

To be honest, I had never heard of the guy until Jeff Levin, my Council of Economic Adviser, called me and told me he was coming to town to address the Columbia Business School Club of Baltimore.

"This guy predicted the '87 crash a year before everyone else," Levin, who holds an MBA degree from Columbia and manages Fields of Pikesville, said. "He is not only grounded in economics, but is also extremely street smart."

Rogers turned out to be a small, energetic man, who speaks with a soft Alabama accent and favors bow ties. Here is where he is and is not putting his dough:

Central Europe -- "A disaster for the next five, 10, 15 years. Anyone who tells you to put money in Central Europe is nuts."

The former Soviet Union -- "Chaos. Civil war. Economic collapse. I not only wouldn't put a nickel of my money there, I wouldn't put a nickel of your money there."

China -- "The next great economic power in the world. The economy of the 21st century."

Africa -- "A continent of enormous resources with great promise."

Latin America and South America -- "I am very optimistic. I have invested all over Latin America and I'm wildly bullish on Peru."

The United States of America -- "I am greatly worried. There is a mania out there of people begging to get into mutual funds. Hysteria is fueling it now. Before too much longer, that bubble is going to burst."

After Rogers was done speaking, I asked him to explain America's problems in terms that a financial idiot (i.e. me) could understand.

"Well," he said, "one major problem with our economy is that our national debt is 70 percent of our Gross National Product."

To understand what this means, try imagining that 70 percent of your take-home pay goes to pay your monthly credit card interest. Doesn't leave much left over, does it?

So you have to borrow even more to buy the things you want. Which is what America does.

"We keep borrowing money," Rogers said, "and somebody has to lend it to us. But someday, that somebody is going to take a look at all the debt we have and refuse to lend us more."

And Rogers believes this and other economic forces are going to converge during Clinton's presidency and sweep him and the Democratic Party away forever.

The only way to avoid that would be for Clinton to call for measures the American people would find so painful that they would never re-elect Clinton. So Clinton won't call for them, Rogers said, and "he will opt for inflation rather than biting the bullet and our standard of living will get worse."

Rogers has been wrong before and he may be wrong now. But both he and Clinton agree on one thing:

In the '80s, people said greed was good. In the '90s, pain is good.

And the more pain, the better.

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