Rogers: Europe Should Let Greece Go Bankrupt

Investor Jim Rogers says Europe should let Greece go bankrupt.

“It would be good for the euro, it would be good for Greece, it would be good for everybody,” Rogers says. “If Greece went bankrupt, then everybody would say, ‘Boy, the euro is serious. It’s going to be a sound currency.’”

“The euro would go straight up. It’s not going to happen that way, but that’s what should happen,” he recently told Bloomberg.

Letting Greece go bankrupt would strengthen the euro by “letting people know they cannot spend money they don’t have, ” Roger says. “Everybody would have to run a disciplined and sound currency.”

Nor would a Greece bankruptcy harm Europe as a whole, he observes.

“If Idaho went bankrupt in America, do you think America would fall apart?” he asks. “Do you think the U.S. dollar would disappear? Of course not.”

Greece, Rogers points out, is only 2 percent of Europe’s gross national product. And the country has promised to cut its deficit and spending ever since joining the euro state, but has never actually done so.

Other European politicians have been doing the same thing, Rogers notes, and they — not hedge funds and currency speculators — are responsible for the euro’s current problems, which in turn cause investors to dump euros.

“When Fannie Mae got in trouble, people sold Fannie Mae. Speculators didn’t cause Fannie Mae to run up gigantic debts and get into trouble, management did, and that attracted investors who tried to take advantage of the situation,” he says.

Yields on Fannie Mae and Freddie Mac mortgage securities that guide U.S. home-loan rates fell to the lowest relative to Treasuries on record, even as the scheduled end of Federal Reserve purchases approaches, Business Week reports.

Spreads on agency mortgage bonds have held near lows while the unprecedented Fed program, in which the central bank is buying $1.25 trillion of the debt, nears its March 31 conclusion.