The government's bailout plan amounts to nothing less than "horrible economics," says investment guru Jim Rogers.
"They're saying to all the banks, you don't have to tell us your situation. You can continue to use your balance sheet that is phony," Rogers said in a recent teleconference at the Reuters Investment Outlook 2009 Summit that was held in December.
Most of the significant American banks, the larger banks, are already totally bankrupt, Rogers says.
Moreover, the plan amounts to "taking the assets from the competent people and giving them to the incompetent people so they can compete with the competent."
Rogers notes that some banks remain sound, especially those that don't make or hold subprime mortgages or have high ratios of deposits to equity.
"All the classic old ratios that most banks in America forgot or started ignoring because they were too old-fashioned," he says.
Rogers calls the idea that Lehman's bankruptcy filing triggered the stock market's crash laughable because banks have been failing for hundreds of years without taking stocks down with them.
Former Georgia Republican Congressman and Libertarian Party presidential candidate Bob Barr agrees with Rogers that the government's rush to spend tax dollars bailing out financial institutions was poorly thought out.
"On May 12th, when I announced my candidacy for president, our national debt was $9.366 trillion," Barr says.
"Today, less than seven months later, our national debt is $10.681 trillion."
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