Published January 26, 2009

Jim Rogers ruffles feathers in Britain

Gordon Brown, analysts hit out at commodities bull over his UK views

By NEIL BEHRMANN
IN LONDON

	Email this article
	Print article
	Feedback

BRITISH Prime Minister Gordon Brown and economists have attacked Jim Rogers, the speculator and commodities bull, for his 'Armageddon-esque vision of Britain' and sterling.

Mr Rogers: His remarks might have contributed to 4per cent slide in sterling towards the end of last week

Commodity advisers have also questioned Mr Rogers' track record as he has remained bullish during the raw materials slump from the bubble peak in July 2008.

Mr Rogers, who is now based in Singapore and with George Soros was co-founder of the Quantum Fund in 1970, has generated considerable UK media coverage for his bearish views.

At an Asian Economic Forum in Hong Kong, Mr Rogers, who left Mr Soros' business several decades ago, urged his followers 'to sell any sterling you might have'.

'It's finished. I hate to say it, but I would not put any money in the UK.'

He added that the UK had lost its appeal because North Sea oil and London's standing as a major financial centre - its most attractive assets - were in decline. He advised young British people to learn Mandarin and immigrate to China.

Mr Rogers' remarks might have contributed to 4 per cent slide in sterling towards the end of last week, but he told the BBC that he had not sold the pound short.

Mr Brown retorted: 'If you think we are going to build our policy around the comments of a few speculators who want to make money out of Britain then you are very, very wrong.'

Since its peak of 2.10 against the US dollar in 2007, sterling has tumbled by 34 per cent to 1.38, after touching 1.35 last week. Several economists believe that though the pound could overshoot further, it is oversold. Its fair value on a purchasing-power basis is around 1.65.

David Simmonds and Ross Walker, head of foreign exchange strategy and UK economist respectively at Royal Bank of Scotland (RBS), published an open letter to the multi-millionaire, arguing that his claims were 'exaggerated' and 'lacking rigour'.

They admitted that the UK is in deep recession and 'profound difficulties'. But they argued that Mr Rogers is wrong to highlight the country's oil production as a problem.

'While some markets function with a lag, to cite (declining UK oil production) as a major negative influence for 2009 and beyond seems an implausible stretch. As far back as the 1990s, UK oil exports averaged just 1.2 per cent of GDP, a far cry from the 4.6 per cent in 1984. . . There is really no basis for claiming it is central to UK economic growth, let alone employment.'

The RBS pair also disagree with Mr Rogers' comments on Britain's export performance and the importance of the financial sector. Even in its current depressed state, manufacturing still contributes a greater share of the UK economy than financial services, they said.

Several commodity traders and analysts are also highly critical of Mr Rogers' persistently bullish views on commodities. His funds are based on the Rogers International Commodities Index, which surged in the commodities boom but slumped by 55 per cent between June and the end of December 2008.

During this time, Mr Rogers claimed in television and other interviews that commodities remained in a long-term bull market.

In the past few months, he has been persistently wrong in his predictions on oil, metals and other commodities, analysts say.

In a previous interview with the International Herald Tribune, Mr Rogers also said that he had invested in Zimbabwe in 1993. The Zimbabwe dollar is now worthless in a failed state that has a collapsed economy and hyper-inflation.