The Fed, explains commodities bull Jim Rogers, has made things worse by printing huge amounts of money, causing huge inflation, and driving the dollar down.
Plus, American taxpayers will have to pay off the $400 billion spent on Bear Stearns.
"If the system is so fragile that the collapse of the fifth-largest investment bank in America could bring the whole thing down, what’s going to happen in a few years when the No. 2 or No. 1 banks go bad?" Rogers asks.
"What’s Bernanke going to do, get in his helicopter and fly around the country repossessing cars and houses? This is insane."
So, Rogers say he's buying airlines.
It's counterintuitive: Twenty-four airlines went bankrupt last year, and five of the seven largest U.S. air carriers went bankrupt during the past decade.
"That’s great news," Rogers says. "Bankruptcies are signs of bottoms, not signs of tops."
"I fly a lot and planes are full," Rogers notes. "You read every day that the airlines are cutting capacity and raising fares. How much more bullish can you get?"
Rogers' current investment picks also include Swiss francs, Japanese yen, agriculture and oil — but no financials right now.
"I'm short on the investment bank ETF, which means I’m short on all of them," Rogers observes.
"Some of these companies have horrendous balance sheets."
Financials go for unbelievably low prices in bear markets, he points out, but this bear hasn’t hit bottom yet.
Rogers — who is also short Citibank and Fannie Mae — says the excesses in financial markets have been far too great.
"You don't see any 29-year-old cotton farmers driving Maseratis," Rogers says.
"But a lot of 29-year-olds on Wall Street are driving them. This is not the way the world is supposed to work."
However, the oil bull market has years to run, Rogers says, even though big market reactions can still occur.
He points out that the price of oil has dropped by 50 percent twice since 1999.
"Unless someone discovers a lot of oil very quickly in accessible areas, we’re running out of known oil reserves," Rogers says.
"If the price of oil goes high enough, they’ll be drilling on the White House lawn and Buckingham Palace."
And because food reserves are at their lowest level in 50 years, unless someone starts bringing on a lot more capacity soon, Rogers believes the agricultural bull market has got a ways to go, too.
Meanwhile, prices for nickel, zinc and silver are down 50 percent to 80 percent from their historic highs, yet Rogers is waiting to add more of these commodities to his portfolio.
"It looks like Congress is about to do something that will drive commodity prices down, and that will create a fantastic buying opportunity," he says.
Rogers advises investors, however, not to panic in bear markets.
"Bear markets perform a necessary service by cleaning out the system," he says.
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