“Letting Lehman fail was perhaps the only thing governments have done right during this whole drama,” Jim Rogers says in brief statement to the Financial Times today.
Rogers argues that the government’s actions to rescue Long Term Capital Management 10 years ago created systemic risk based on the assumption that the government would ride to the rescue. “Had the central bank allowed the failure of Long Term Capital Management to run its course, Lehman, Bear Stearns, et al would still be here,” he says.
Rogers also argues that the current bailout policies are counter-productive. “Market fundamentals are that failures should collapse and be replaced by creative new forces rather than being propped up as zombies,” he says.
“Marx is singing in his grave there in London as the US government now controls the auto, mortgage, insurance, banking, et al industries and he has not fired a shot,” Rogers says.