Investment guru warns of looming market crash

By Gokhan Kurtaran

LONDON (AA) – One of the world’s best known investment gurus sounded an ominous warning Thursday on the next market downturn, suggesting it would be unlike anything he has ever seen.

“It has been 9-10 years since we had the last bear market. That is unusual. Usually it happens every four to eight years, so we are overdue. It is going to come, and when it comes, it is going to be very, very serious. The next bear market will be the worst in my lifetime,” Rogers, chairman of Rogers Holdings Inc., told Anadolu Agency in a phone interview.

Rogers also said the global debt level is much higher than it was in 2008.

“In 2008, we had a big problem because there was too much debt. Since then, debt has skyrocketed everywhere. There is much more debt now.

“Collapses don’t happen in one day. They evolve for 2-3 years. So you don’t see a big crisis in just one day until the very end. When it starts, it will start evolving into a bear market and it will eventually collapse.”

The 75-year-old veteran investor said that almost no one paid attention when Iceland and Ireland had economic problems before the last global financial crisis up until the collapse of Lehman Brothers.

The same could be said of Latvia and its banking crisis.

“In Latvia, the banking system collapsed. Most people have never heard of Latvia. It is happening there.

“Then we see some Chinese companies are getting into trouble. There will be some pension plans in America getting into trouble. Things have started to happen.”

- Risks for emerging markets

Rogers also warned emerging economies to get ready for harder financing conditions in case of such a crash.

“Emerging economies should get out of debt as much as they can. Certainly they should not rely on capital inflows and have internal financing capability as much as possible,” he said.

Noting that the U.S. dollar has been strengthening against emerging economies’ currencies, he said "loose money will continue to help emerging markets, but the strength of the U.S. dollar will hurt some emerging markets”.

“Nearly all emerging markets’ currencies have been weak against the U.S. dollar because the dollar is strong. When the dollar is strong, it makes your currency look like it is weak. For Turkish currency, in my view, it’s more geopolitical than anything else. It’s the neighborhood that you live in. It’s not you that is causing problems, it’s your neighborhood.”

- ‘America wants war’

Turning to rising geopolitical tensions, which impact stocks and bonds, Rogers was equally pessimistic.

“The problem is, in America, they think they want war. America wants war. I hope it doesn’t happen,” he said.