Rogers says move indicates U.S. is “more Communist than China”
Monday, Sept 8, 2008
A leading investor has denounced the government seizure of two of the nation’s largest financial companies as “madness” and says the move will only serve to make the markets more volatile and see house prices continue to go down.
In an interview with CNBC Jim Rogers, CEO of Rogers Holdings, described the move by the Treasury to nationalize Fannie Mae and Freddie Mac as “insanity”.
The Treasury has pledged to provide as much as $200 billion to the companies, replace their chief executives and place them under a conservatorship, giving management control to their regulator, the Federal Housing Finance Agency, or FHFA.
“This is madness, this is insanity,” Rogers said, “they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I’m not quite sure why I or anybody else should be paying for this.”
“America is more communist than China is right now,” Rogers declared. “You can see that this is welfare of the rich, it is socialism for the rich… it’s just bailing out financial institutions,” he added.
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Rogers and other critics alike are concerned that American taxpayers, already facing the worst housing bust since the 1930s, will now be saddled with billions of dollars in losses from home loans made by the private sector, radically changing the nature of the crisis. Government officials have justified the move by stating that that the cost of doing nothing would be far greater.
“You’re certainly gonna see a huge jump in any financial institutions which owned a lot of Fannie or Freddie… because they don’t have to worry about going bankrupt all of a sudden,” Rogers said.
“Bank stocks around the world are going through the roof, that’s ’cause they’ve all been bailed out. You don’t see the homeowners in Kansas going through the roof ’cause they’re not being bailed out,” he added.
Other investors have criticized the takeover as a “stopgap” and a “band aid” aimed at keeping the companies going into 2009, leaving the next president and Congress to deal with the fallout.
Jim Rogers commented that neither of the presidential candidates has a solution to the crisis.
“This is a big huge mess and neither one of them has a clue what to do next year. It’s going to be a mess.” Rogers said.
Watch the interview with Jim Rogers:
This article was posted: Monday, September 8, 2008 at 12:23 pm