Eurozone leaders revived hopes for the future of the single currency last week by agreeing €109bn of further aid for Greece, some of which will be funded by bondholders as the country is allowed to selectively default.
Outspoken industry maverick Jim Rogers has previously said the eurozone debt crisis was “the death knell for the euro”. Speaking exclusively to Investment Week, he explains why the latest bailout has made the situation worse for the single currency.
How has last week’s news impacted your view on the euro?
EU leaders are just doing the same thing, but they are making the problem worse. This does not change anything from what I have said about the euro before.
Do you view the haircuts for bondholders as a drastic step?
It is a positive step but not a drastic step. A drastic step needs to be taken, but this is nowhere near that. It is a step in the right direction, but it is going to get a lot worse before it is over.
What is needed to save the euro in your opinion, if it can be saved?
You have got to make these people cut spending with an axe. We have to go to the Greeks, Belgians, Italians and French and say “we cannot do this anymore”. The world has changed, financial markets are not going to accept this kind of garbage in 2013 or 2018 – we cannot continue.
Irish and Spanish bond yields have fallen from recent peaks. Does this mean contagion risk to other European economies is less of a worry?
This is just delaying the problem and making people think things are better. But Spanish, Greek and Belgian debt will still go up – it makes everyone feel better for a while.
How has last week’s news impacted your view on the euro?
EU leaders are just doing the same thing, but they are making the problem worse. This does not change anything from what I have said about the euro before.
Do you view the haircuts for bondholders as a drastic step?
It is a positive step but not a drastic step. A drastic step needs to be taken, but this is nowhere near that. It is a step in the right direction, but it is going to get a lot worse before it is over.
What is needed to save the euro in your opinion, if it can be saved?
You have got to make these people cut spending with an axe. We have to go to the Greeks, Belgians, Italians and French and say “we cannot do this anymore”. The world has changed, financial markets are not going to accept this kind of garbage in 2013 or 2018 – we cannot continue.
Irish and Spanish bond yields have fallen from recent peaks. Does this mean contagion risk to other European economies is less of a worry?
This is just delaying the problem and making people think things are better. But Spanish, Greek and Belgian debt will still go up – it makes everyone feel better for a while.
All the politicians are hoping they can put things off until the next election, but that is all it is doing. It is not solving the problem.
How are you playing the crisis?
I owned the euro since last summer and I am not selling it. I am not changing my view.
How are you playing the crisis?
I owned the euro since last summer and I am not selling it. I am not changing my view.
If the authorities can change their view, the euro will be the greatest currency in the world, but not until they solve their fundamental problems.
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